Aluminium Stocks Benefiting from Hormuz Crisis
The blockade in the Strait of Hormuz has resulted in 9% of the global aluminium supply being disrupted, causing prices to rise above $3,550 per ton. North American aluminium producers and recyclers are positioned to gain from this situation amid increasing production costs due to higher energy prices.
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Aluminium production is energy-intensive, primarily relying on bauxite processed into aluminium oxide. The ongoing crisis has pushed aluminium prices to a four-year high, with forecasts suggesting they may stabilize between $3,500 and $4,000 per ton depending on conflict duration.
Companies such as Alcoa, with operations outside the conflict zone and a focus on renewable energy, are better positioned to mitigate rising energy costs. Century Aluminum is developing a new smelter in Oklahoma, expected to produce 750,000 tons annually, doubling U.S. output.
Analysts note that recyclers like Constellium could also benefit from high aluminium prices, enhancing the economic viability of recycling. Higher production costs from the crisis may adversely affect downstream manufacturers in aviation, automotive, and packaging sectors.
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