Aluminum Prices Rise as Supply Concerns Mount in China and Guinea

-Iran conflict. Commodity desks at Mercuria, Goldman, and JPMorgan have warned of a potential supply shock. Disruptions began with outages at Middle East smelters and restrictions at the Strait of Hormuz. These issues now overlap with new limits on Chinese output.

Chinese authorities have begun to restrict excess production as inventories rise. A smelter in Baise, Guangxi province, has already reduced output of molten aluminum, according to Mysteel. The Ministry of Industry and Information Technology stated on May 13 that steel and oil refining industries will also face inspections.

Guinea, the world's largest bauxite producer, plans to limit ore exports starting in June. Mines and Geology Minister Bouna Sylla told Bloomberg the government wants to raise prices after a recent slump. "Supply mustn't exceed demand," Sylla said. " Most of Guinea's bauxite is shipped to China for refining into alumina and then aluminum.

Prices in London reached $3,673 per ton, the highest level since March 2022. JPMorgan analysts stated the global aluminum market could face a prolonged supply outage even if Hormuz traffic resumes.