European aluminium billet premium doubles after Iran war disrupts supply, squeezes consumers

• Rotterdam aluminium extrusion billet premium surged from $530 to $1,100 per ton, while the physical premium for primary aluminium rose 63% to $585-625 per ton for May-June delivery
• Middle East produces 9% of global aluminium supply (7 million metric tons annually), with bulk shipping through Strait of Hormuz largely suspended for two months
• Supply tightening accelerated by Emirates Global Aluminium's force majeure declaration after Iranian attack damaged its smelter, plus suspension of deliveries from Sweden's Kubal (owned by Russia's Rusal) amid sanctions investigation

Summary: European Aluminium Billet Premium Doubles Amid Middle East Supply Disruption

Key Developments:

European aluminium billet premiums have doubled since the Iran conflict began, driven by severe supply shortages from the Middle East. The Rotterdam premium for aluminium extrusion billet surged to $1,100/metric ton by late April, more than doubling from the pre-war level of $530/ton.

Market Impact:

• Benchmark LME aluminium prices hit four-year highs of $3,672/ton on April 16, up 12% since U.S. and Israeli strikes on Iran launched February 28
• Physical premiums in Europe increased 63% to $585/ton, with May-June premiums reaching $625/ton
• The conflict has largely suspended shipping through the Strait of Hormuz, disrupting exports from a major supplier of primary aluminium and alloys to Europe

Supply Constraints:

The Middle East accounts for 9% of global aluminium supply with 7 million metric tons of annual capacity. Emirates Global Aluminium (EGA) declared force majeure on billet contracts after an Iranian attack damaged one of its UAE smelters in late March.

Additional pressure comes from suspended deliveries by Sweden's Kubikenborg Aluminium (Kubal), owned by Russia's Rusal, which halted shipments April 9 following sanctions-related investigations into its CEO.

Industry Implications:

The shortage particularly affects European consumers in construction and transport sectors, with logistics sources warning that conditions will tighten further as Gulf producers' European stockpiles deplete. Aluminium billet, a high-purity semi-finished product used for high-performance parts, faces the most acute shortage.