【Ferro-alloys.com】：Chinese exporters of aluminium products are now expected to have a much better year as the Iran war tightens global supply and boosts margins, with some earlier forecasts for flat shipments revised sharply higher.

The Gulf accounted for roughly 9% of global supply before the war but most of that has been trapped by the closure of the Strait of Hormuz. Moreover, Iran's recent attacks on two of the region's biggest aluminium smelters have heightened the risk of a supply deficit even if the waterway is opened.

"It's difficult for the aluminium production lines that sustained damage to recover in the short term, and that will likely lead some orders to flow to China. We are optimistic about exports this year," said Kiki Xi, an analyst at consultancy Aize China.

The war has triggered a surge in aluminium prices on the London Metal Exchange. They are up 12% since late February versus a rise of 4% on the Shanghai Futures Exchange.

In Japan, the second-quarter aluminium premium hit an 11-year high, while the European duty-paid aluminium premium for April delivery touched a near four-year high.

INQUIRIES JUMP, FORECASTS REVISED
Aluminium exporters in China, the world's largest supplier, have seen inquiries from overseas jump, traders and analysts said.

Profits are already climbing.

For example, export profits for aluminium sheet, which is used from food cans to aerospace, climbed 43% month-on-month to as much as $590 a ton on March 26, according to two Chinese traders, who spoke on condition of anonymity.

Fastmarkets now projects annual volume growth for Chinese aluminium exports at 12%-18% compared to its prior outlook of potentially flat to slightly negative.

Broker Wuchan Zhongda Futures lifted its forecast for aluminium exports to 10% from 5%.

Consultancy Aladdiny now predicts exports of fabricated aluminium products will grow 5% to 10% in 2026, versus its earlier forecast of flat growth before the war.

DEMAND WEAK AT HOME

Higher prices overseas will give the industry some relief as demand at home has been weak, particularly in the property sector, while Beijing's removal of an export tax rebate in late 2024 has also hurt.

Weak domestic demand has left cargoes free for export with inventory in Shanghai hitting its highest since April 2020 at 454 571 tons on March 27. By contrast, LME and US Comex aluminium stocks have sharply contracted.

• [Editor:Alakay]