Amid continued tensions in the US-Iran geopolitical situation, the global aluminum supply chain is facing an unprecedented shock. JPMorgan issued a research report warning that visible global aluminum inventories have plummeted to just 1.9 million metric tons, equivalent to less than nine days of global consumption demand. This figure stands in stark contrast to early 2021, when inventories covered about 20 days of demand, highlighting the extreme tightness of the current market. Currently, aluminum prices on the London Metal Exchange (LME) are hovering around $3,500 per metric ton, but JPMorgan expects prices to break above $4,000 per metric ton in the coming months, reaching $3,800 per metric ton in the second quarter, with an average price of around $3,500 per metric ton for the full year.

The research report points out that the market has passed an “irreversible turning point,” triggered by attacks in late March on the Al Taweelah smelter in Abu Dhabi and the Alba smelter in Bahrain. The Al Taweelah smelter, owned by Emirates Global Aluminium, has been confirmed to be completely shut down. Due to severe damage to key equipment, the repair period is expected to take up to 12 months, and this single facility alone will cut more than 1 million metric tons of global aluminum supply in 2026. Meanwhile, only one of the six production lines at the Alba smelter in Bahrain remains operational, with capacity utilization at about 30%. Additionally, aluminum production losses in Iran are still being assessed, but are expected to further widen the supply gap.

Combining these impacts, JPMorgan forecasts that aluminum production in the Middle East will plunge 36% year-on-year in 2026, a reduction of 2.4 million metric tons. Even by 2027, production in the region is still expected to be 950,000 metric tons lower than pre-conflict levels. Such a large-scale supply collapse, against the backdrop of already historically low global inventories, could trigger a structural revaluation of the aluminum market. Analysts believe that if geopolitical conflicts persist or escalate, the upside risk for aluminum prices will increase further, and downstream industries such as aerospace, automotive manufacturing, and packaging will face significant cost‑pass-through pressures. Investors are closely watching the next moves in the US-Iran situation and whether a squeeze may occur in LME aluminum inventories.