The United States and Iran have officially reached a ceasefire recently, easing geopolitical tensions in the Middle East and greatly mitigating supply risks in the bulk commodity supply chain. Affected by previous US-Iran confrontation, navigation in the Strait of Hormuz, a key global shipping waterway, was restricted, hindering the transportation of aluminum raw materials. The market added high geopolitical risk premium, pushing global aluminum prices higher. Following the official ceasefire, shipping traffic in the strait has fully resumed. The shipment of aluminum ingots and alumina in the Middle East returns to normal, and local aluminum mills resume production and outbound delivery in an orderly manner. The tight global aluminum supply is eased, market risk aversion fades, and the geopolitical risk premium on aluminum prices triggered by regional conflicts is completely eliminated. With balanced supply and demand and fading market bearish sentiment, global spot and futures aluminum prices drop synchronously, cutting aluminum raw material procurement costs, which benefits industrial raw material purchasing and overall production cost control.
