Bernstein: Global Metals & Mining — Aluminium Markets Bent but Not Broken by the Hormuz Conflict
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Bernstein reports that the global aluminium market, sized at approximately 100 million tonnes of demand, has been severely disrupted by the Strait of Hormuz conflict but remains fundamentally intact. The Middle East accounts for 7% of global supply, heavily reliant on the strait for exports. Military strikes have damaged roughly 2.6 million tonnes of capacity, equivalent to 3% of global demand. Restarting these operations will take anywhere from several months to several years.
Consequently, aluminium prices have surged to their second-highest historical level, approaching the previous peak established during the 2022 Russia-Ukraine conflict. Bernstein has revised its 2026 aluminium price forecast upward, anticipating elevated average prices throughout the year. For 2026, the firm projects an average price of $3,400 per tonne, including an estimated $3,600 per tonne in the second quarter, before moderating slightly to $3,400 in the second half.
Despite the current supply deficit projected for 2026 and 2027, Bernstein expects the market to return to a surplus of 1% to 3% from 2028 through the mid-2030s as damaged capacity is gradually restored. The long-term price assumption remains anchored at $2,700 per tonne. Rio Tinto stands out as the primary beneficiary of this price spike. Rated at Outperform with a target price of £62.00, Rio Tinto produces around 3 million tonnes annually. Every $100 per tonne increase in aluminium prices translates to approximately $300 million in incremental EBITDA for the company.