Huomuxi "lock throat" aluminum supply Citigroup raises aluminum price target to $3600

Recently, Citigroup Group (C.US) has raised the price target for three-month aluminum futures on the London Metal Exchange (LME) from $3400 per ton to $3600 per ton, and even stated that in a bullish scenario, aluminum prices could potentially rise to $4000 per ton. This move is mainly due to supply disruptions and force majeure declarations following the escalation of tensions in Iran. Citigroup stated in its report: "Two producers in the Gulf region have been hit by force majeure, indicating that the market has shifted from facing risks to experiencing real supply disruptions." Earlier, concerns over the impact of Middle East conflicts on the supply of this widely used metal in the construction, transportation, and packaging industries were heightened as Bahrain Alba halted shipments, causing LME three-month aluminum prices to reach a nearly four-year high on Wednesday. As the largest aluminum smelter outside of China, Bahrain Alba announced on Wednesday that it was facing force majeure and warned some customers that their shipments would be delayed due to the inability to transport through the Strait of Hormuz. Currently, the shipping activities through the Strait of Hormuz, which connects Iran to Oman and carries about one-fifth of global oil trade volume, have almost come to a standstill due to retaliatory strikes by Iran against the US and its allies. Citigroup believes that the conflict's impact may last for a considerable amount of time due to shipping and insurance-related issues. Even if some transportation resumes, the normalization of container shipments of primary metals and value-added products may be much slower than tanker shipments. The institution also warned of potential instability in related facilities or electrolytic cell production lines, which could lead to production restart delays of several months. Similarly, Goldman Sachs Group, Inc. also stated on Monday that if production disruptions in the Middle East continue for a month, aluminum prices could reach $3600 per ton.