Uncertainty over shipping in the Strait of Hormuz is raising concerns for global trade, with the aluminium industry joining the oil and liquefied natural gas (LNG) sectors among those most affected.
Although oil and LNG exports have not seen major disruptions, fluctuating vessel traffic and ongoing security concerns are affecting confidence in one of the world’s most important shipping routes.
The uncertainty is raising concerns not only about aluminium exports from the Gulf but also about the raw materials and energy supplies needed to keep aluminium production running.
The Gulf Cooperation Council (GCC) exports around 5.5 million tonnes of primary aluminium every year, with almost all shipments passing through the Strait of Hormuz.
At the same time, Gulf smelters depend on imported alumina and bauxite delivered by sea, meaning any prolonged disruption could affect both incoming raw materials and outgoing aluminium exports.
Shipping concerns increased after Iran announced that the Strait of Hormuz had been closed following the recent Israeli conflict in Lebanon.
The announcement led to a sharp drop in commercial vessel movements and renewed concerns over the security of a waterway that normally carries about one-fifth of the world’s oil and LNG trade.
According to maritime intelligence firm Windward, only 12 vessels passed through the Strait on Sunday, June 21, compared with 35 the previous day.
The company also said several vessels switched off their Automatic Identification Systems (AIS), making it harder to track their movements.
Windward said the traffic pattern looked more like previous periods of disruption than normal commercial shipping.
The slowdown came after a brief improvement earlier in the week. Shipping analytics firm Kpler recorded 25 vessel transits on Thursday, the highest daily figure since mid-April, after diplomatic talks between Iran and the United States appeared to ease tensions.
However, hopes of a recovery faded after Iran’s Islamic Revolutionary Guard Corps announced on Saturday, June 20, that the Strait had been closed again, citing Israel’s failure to fully implement a ceasefire agreement.
The United States rejected Iran’s claim. US Central Command (CENTCOM) said safe navigation through the Strait remained possible and reported that 55 merchant vessels passed through the waterway on Saturday, much higher than estimates from commercial ship-tracking services.
The different accounts have added to the uncertainty facing shipowners, insurers and commodity traders already dealing with security risks in the region.
Even before Iran’s latest announcement, traffic through the Strait remained well below normal. According to Kpler, between 100 and 120 tankers used the route each day before the conflict.
Matt Smith, Kpler’s lead oil analyst, said traffic had improved slightly but was still far from normal.
“It’s not like you’re suddenly seeing a mass exodus,” Smith said. “There is a pickup in traffic… but not material. We are still not at the point where a ‘first mover’ is emerging.”
Around 500 vessels, including about 220 oil tankers, have remained stranded in the Persian Gulf since the conflict began.
Experts believe it could take several months for shipping and oil flows to return to normal.
Security concerns also continue to slow the recovery.
Jakob Larsen, Chief Safety and Security Officer at BIMCO, said the shipping industry’s security situation remains unstable despite ceasefire talks.
“Despite the signing of the ceasefire agreement, we believe the security situation for the shipping industry remains volatile,” Larsen said.
He added that parts of the central Strait are reportedly mined, forcing ships to use limited coastal routes near Oman and Iran.
Many vessels have also been anchored for months and may need inspections, maintenance and resupply before returning to service.
Diplomatic talks are continuing. During recent discussions in Switzerland, Iranian Foreign Ministry spokesperson Esmaeil Baghaei said maritime security was an important topic.
“The sides discussed the safe passage of ships through the strait, and a mechanism was set up, which is important,” Baghaei said.
For the aluminium industry, the uncertainty is affecting more than exports.
Around 5.5 million tonnes of GCC primary aluminium pass through the Strait every year. At the same time, Gulf smelters import alumina and bauxite from Australia, Guinea and Brazil to keep production running.
This means the industry depends on the Strait in both directions. Raw materials need to reach Gulf smelters, while finished aluminium must be shipped to customers in Europe, Asia and North America.
Industry analysts say Gulf smelters usually keep only three to four weeks’ worth of alumina in stock. Any long disruption to shipping could therefore affect production as well as exports.
The aluminium industry also depends heavily on reliable energy supplies.
Aluminium production is one of the most electricity-intensive manufacturing processes. Many smelters in Asia, Europe and other regions rely indirectly on oil and natural gas supplied from the Gulf.
If energy shipments through the Strait are disrupted for a long period, fuel prices and electricity costs could rise, increasing production costs for aluminium manufacturers.
The impact would not be the same everywhere.
Europe gets about 20% of its primary aluminium from the Middle East, making it one of the most exposed regions.
Countries such as Japan, South Korea and Taiwan also depend heavily on Gulf aluminium and Gulf LNG, while the United States is already seeing higher Midwest aluminium premiums with tariffs limiting alternative sourcing options.
Despite the uncertainty, financial markets have remained relatively stable.
London Metal Exchange (LME) aluminium prices remained steady at around USD 3,400 per tonne on June 19. Brent crude prices fell slightly, while major Asian stock markets rose, showing that investors do not expect a long-term disruption to global energy supplies.
However, the physical aluminium market is showing signs of tighter supply. Premiums have increased in Rotterdam and the US Midwest as buyers compete for available metal, while some alumina shipments that were expected to go to the Gulf are being redirected to China.
References: alcircle, discoveryalert
