Key Aluminum Spread In London Hits Biggest Backwardation Since 2007

Aluminum futures in London surged to a four-year high on Monday as President Trump’s Strait of Hormuz blockade, set to take effect this morning, threatened to deepen supply chain disruptions across the Gulf region. On top of that, the Gulf’s largest aluminum producer declared force majeure on parts of its contract book over the weekend.

Aluminum climbed 1.4% to $3,547 per ton on the London Metal Exchange as traders priced in increased shipment disruption risk ahead of President Trump’s Hormuz blockade, which U.S. officials said would take effect at 10:00 a.m. New York time on Monday.

The move extends a broader war-driven rally in industrial metals, with aluminum up about 18% year to date, as the market remains gripped by supply fears and tightening Gulf flows.

Emirates Global Aluminum (EGA), the Gulf’s largest aluminum producer, recently halted operations at its Al Taweelah smelter following Iranian missile and drone strikes.

By Saturday, Bloomberg had obtained documents indicating that EGA declared force majeure on parts of its contract book.

EGA is jointly owned by Mubadala Investment Company of Abu Dhabi and the Investment Corporation of Dubai, and it reported 2.83 million tons of cast metal sales in 2025, indicating on its website that it accounted for 4% of the world’s aluminum production. The broader Middle East accounts for about 9% of global aluminum supply.

One of the clearest signs of stress in aluminum markets is the front-end squeeze in the LME curve.

The cash-to-three-month spread jumped 37% to $91.50 a ton from $66.70 on Friday, marking the biggest backwardation since 2007 and signaling a scramble among traders for metal supply.

Earlier this month, Goldman commodity specialist James McGeoch told clients, “Hard to think of a bigger metal supply shock: High degree of expectation this was where it was heading, but the initial reaction was to fade the uncertainty yesterday, that should be replaced by fresh length if history is a guide.”