JPMorgan Targets $4,000 Aluminum Price as Middle East Supply Disruption Widens; LME Index Hits Record High

Gate News message, April 17 — The London Metal Exchange (LME) index, which tracks six major metals, hit a record high this week, driven by Middle Eastern geopolitical conflict disrupting aluminum supplies and rising copper prices. LME aluminum reached above $3,650 per metric ton on Thursday, the highest level since March 2022. The Middle East accounts for approximately 9% of global aluminum production.

Aluminum prices have surged roughly 15% since the Iran-Israel conflict erupted in late February. The Middle East’s two critical smelters in Abu Dhabi and Bahrain were directly targeted, triggering production halts. Qatalum in Qatar initiated controlled shutdown, with parent company Hydro estimating 6–12 months for full restart. Bahrain’s Alba declared partial force majeure, while Emirates Global Aluminium (EGA), the region’s largest producer, invoked force majeure for at least partial deliveries. The Strait of Hormuz closure has also disrupted freight flows, compounding supply concerns.

According to JPMorgan’s latest report, the aluminum market is experiencing its largest supply deficit in 25 years, shifting from a cyclical shortage narrative to a structural, prolonged supply collapse driven by capacity destruction, limited substitution options, and regional imbalances. JPMorgan frames this as a supply “black hole”—once smelting capacity is damaged, recovery takes years rather than months, making the $4,000 per metric ton target a natural outcome of persistent supply gaps, not a bullish outlier. Shanghai aluminum fell 0.3% to $3,632.50; copper dropped 0.3%; nickel rose 1.8%. The LMEX index gained 3.6% this week.

Meanwhile, Bank of America strategist Michael Hartnett’s team predicts commodity rallies will extend through 2030, regardless of near-term Middle East ceasefire developments. The team argues that commodities represent the highest-conviction post-war trade, with investors seeking hedges against inflation, currency weakness, and geopolitical volatility. They contend that control over chips, rare earths, minerals, and efficient energy will determine AI dominance, making resource security and supply-chain control the core pricing drivers in the post-war global economy.