Metals: Aluminium climbs on supply fears as Middle East conflict escalates

Norsk Hydro ASA

04/03/2026 03:37

March 4 (Reuters) - Aluminium prices continued to climb on Wednesday as supply worries deepened after Norway's Norsk Hydro NHY.OL announced a controlled shutdown in its aluminium joint venture in Qatar amid ongoing war involving the U.S., Israel and Iran.

The Middle East accounts for around 8% of global aluminium capacity. Supply concerns are materializing as the conflict spreads to neighbouring countries, following the Qatalum shutdown and Iran's threat to target ships attempting to transit the Strait of Hormuz.

The most-active aluminium contract on the Shanghai Futures Exchange SAFcv1 was up 2.04% at 24,730 yuan ($3,576.13) a metric ton, as of 0300 GMT.

And the benchmark three-month aluminium CMAL3 on the London Metal Exchange rose 1.18% to $3,289.50 a ton.

Norsk Hydro announced the Qatalum shutdown on Tuesday after its gas supplier warned of an impending supply halt. The company said it had issued a force majeure notice to customers as the curtailment continues, with the shutdown expected to last until end-March and a full restart potentially taking six to 12 months.

The disruption caused by the conflict "hits a market that was already tight," Ewa Manthey, commodities strategist at ING said in a note.

"Prior to the conflict, our aluminium balance showed a deficit of around 600kt in 2026. China's capacity cap, trade dislocations and the imminent shutdown of Mozal were already constraining supply," Manthey said, adding that dropping LME inventories, elevated premiums and the tightening spread between LME cash contract and the benchmark three-month CMAL0-3 all pointed at tight supply even before the conflict.

A stronger U.S. dollar =USD continued to cap the upside of aluminium's gain.

Elsewhere, the most-active copper contract in Shanghai SCFcv1 declined 0.57% to 101,830 yuan a ton, and the benchmark copper CMCU3 was up 0.64% at $13,068 a ton.

Analysts at Citi warned that the Iran conflict could push copper prices below $12,000 a ton in the near term, as continued disruption would keep pressure on the macroeconomic backdrop and persistent drone threats to shipping routes and energy infrastructure add to market stress.

They added that fading expectations for interest‑rate cuts by the U.S. Federal Reserve and softer cyclical growth forecasts have also contributed to downward pressure on prices.

Elsewhere on SHFE, zinc SZNcv1 dropped 0.51%, lead SPBcv1 declined 0.67%, tin SSNcv1 plunged 5.63% and nickel SNIcv1 edged 0.08% higher.

Among other LME metals, zinc CMZN3 added 0.34%, lead CMPB3 rose 0.26%, nickel CMNI3 gained 1.05% and tin CMSN3 climbed 4.19%.

Wednesday, March 4

DATA/EVENTS

0850   France   HCOB Services, Composite PMI   February

0855   Germany   HCOB Services PMI   February

0855   Germany   HCOB Composite Final PMI   February

0900   EU   HCOB Services, Composite Final PMI   February

0930   UK   S&P GLOBAL PMI: COMPOSITE - OUTPUT   February

0930   UK   Reserve Assets Total   February

1000   EU   Unemployment Rate   January

1445   US   S&P Global Comp PMI Final   February

1445   US   S&P Global Comp, Svcs PMI Final   February

1500   US   ISM N-Mfg PMI   February

($1 = 6.9153 Chinese yuan)

 (Reporting by Lewis Jackson and Dylan Duan; Editing by Sherry Jacob-Phillips)