The Iran war has thrown a spotlight on a metal widely used in our economy but probably taken for granted by many — aluminum.
The lightweight metal is used in construction, automobiles, beverage cans and many other everyday applications, but as with some other commodities like oil, the Strait of Hormuz is a major chokepoint for a big chunk of the world’s aluminum trade.
As the U.S.-Iran conflict drags on and the strait remains hostile to shipping, winners and losers are being created in an industry that investors may want to examine more closely.
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Like many other commodities, investing in aluminum can act as an inflation hedge. When the economy is going gangbusters and consumer prices are rising, aluminum demand and prices are also likely to rise as the economy produces more stuff. Alternately, if inflation is caused by, say, rising oil and natural gas prices instead of economic growth, aluminum prices are also likely to increase as production and transportation costs rise. That would especially benefit aluminum producers who power their operations with renewable energy.
Making aluminum is an energy-intensive process. First, bauxite ore has to be mined, transported and processed into alumina. That sandy-white aluminum oxide then has to be turned into pure aluminum metal using vast amounts of electricity in a process called smelting.
While there is some bauxite and alumina production that takes place in the Middle East, the majority of the aluminum industry there is focused on smelting and exporting aluminum made from imported raw materials. The region contributes around 9% of the global aluminum supply.
Iran War’s Effect on Aluminum Prices
Amid the U.S.-Iran war, which has included attacks on major smelting facilities, aluminum prices in London, the world’s primary trading hub for the metal, have shot to four-year highs. Prices are above $3,550 per metric ton, up from just under $3,000 immediately prior to the conflict.
Even if the Strait of Hormuz opens soon, Adam Woodhead, co-founder and senior financial platform analyst at The Investors Centre, expects prices to remain between $3,500 and $3,700 for several months. A protracted conflict could take prices to $4,000, he says.
“Shutdowns and curtailments for refineries aren’t like flipping a switch,” says Darrell Fletcher, managing director of commodities at Bannockburn Capital Markets. “You have six to 12 months of recovery to take place after an all-clear.”
Disruption of the Fragile Aluminum Market
Woodhead notes that the aluminum market was already tight before the Iran conflict began.
“The market was entering a 200,000-metric-ton shortage before the outbreak of war,” he says. “The Iran crisis did not create a fragile market. It simply found one.”
While the war in Iran continues, beneficiaries are North American producers who are not impacted by the conflict, while recyclers should also benefit, he says. Downstream manufacturers in aerospace, automotive, packaging and electronics industries stand to lose the most, as they’ll have to pay higher prices for aluminum.
“Most distributors reckon as high as $4,000 per metric ton is possible if the conflict continues,” says Mark Pacitti, founder and CEO of London-based Woozle Research. “It largely depends how quickly and how many firms can substitute with steel and composites.”
With that in mind, here’s a look at five key aluminum companies, with their year-to-date returns as of the April 21 market close:
| Aluminum Stock | YTD Return | Aluminum Investing Case |
| Alcoa Corp. (ticker: AA) | 26.6% | Renewable energy smelting lowers sensitivity to energy costs. |
| Century Aluminum Co. (CENX) | 56.7% | New Oklahoma smelter serves as critical national-security asset. |
| Kaiser Aluminum Corp. (KALU) | 34.1% | Fabrication focus captures higher margins with hedged costs. |
| Rio Tinto PLC (RIO) | 25.3% | Diversified miner benefits from tight global supply chain. |
| Constellium SE (CSTM) | 58.9% | High-value recycling economics are improving as spot prices rise. |
Alcoa Corp. (AA)
Alcoa is a vertically integrated aluminum company, meaning that it mines bauxite, refines alumina and produces aluminum products. Last year, the company sold a 25.1% stake in the Saudi Arabian Mining Co. (1211.SR), retaining just 2% of that company’s shares. Its exit from the Middle East means it has little exposure to the Iran conflict.
“Alcoa is fully integrated with bauxite mines located in Australia, Brazil and Guinea, none of which are in the conflict zone,” notes Woodhead. “Approximately 86% of Alcoa’s smelted aluminum products are produced using renewable energy, providing them with structurally lower sensitivity to the sharp increases in energy costs generated by the conflict.”
JPMorgan and UBS recently raised their price targets for Alcoa to $68 and $70, respectively. The stock was trading around $67 as of early April 22.
“Both appear overly conservative based on ongoing disruptions extending into Q3,” Woodhead says.
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Century Aluminum Co. (CENX)
This is also a vertically integrated aluminum company. It has bauxite mining and refining operations in Jamaica and aluminum smelters in Kentucky, South Carolina and Iceland.
The company and Emirates Global Aluminum announced in January a joint venture to build the first new smelter in the U.S. since 1980 in Oklahoma. Century will own 40% of the facility, which is expected to produce 750,000 metric tons of aluminum per year, more than doubling current U.S. production.
“When Century formed a joint-venture smelter in Oklahoma, we thought that was smart thinking,” Woodhead said. “Today, it’s essentially a national-security asset, and I believe that investors have only begun to realize that fact in terms of pricing.”
Kaiser Aluminum Corp. (KALU)
This company produces aluminum at 13 facilities across North America. It makes semi-fabricated plate, sheet, coil, extrusions, rod, bar, tube and wire products for the aerospace, packaging, engineering and automotive industries.
In April, KeyBanc initiated coverage on the company with an “overweight” rating and a $170 price target because of increasing aerospace demand, rebounding semiconductor plate demand, and expanding packaging markets, as well as aluminum tariffs that are expected to support high domestic pricing, according to press reports. The stock was trading around $159 on April 22, after about a 4% intraday gain.
“Kaiser operates within the fabrication layer (in) aerospace, automotive and industrial; (it) captures higher margins on sales while hedging reduces raw material cost risks,” Woodhead says. “Sometimes boring is what is needed.”
Rio Tinto PLC (RIO)
“Our best guess based on expert calls we’ve done with aluminum manufacturers/distributors in the region is that Western producers should benefit … as China remains capped from self-imposed quotas, so there’s very little leeway (or) slack in the system globally right now,” Pacitti says.
Frontrunners to benefit from that thesis include Alcoa, Century Aluminum and this Australian miner, Rio Tinto. In addition to mining, refining and smelting, Rio Tinto is also involved in aluminum recycling with a joint venture with aluminum billet and slab producer Matalco.
As one of the largest diversified mining companies in the world, Rio Tinto isn’t a pure play on aluminum. Still, the metal contributed to more than 26% of its sales in 2025, according to company filings.
Constellium SE (CSTM)
“Another group benefiting is recycled aluminum operators,” Woodhead said. “When the spot price reaches levels greater than $3,500, recycling economics improve significantly, although recycling carries very little production risk.”
Fletcher points to recycler Constellium, saying it has high-valued aluminum products and is positioned well for growth cycles. Although Constellium does buy primary aluminum, it gets about half of the aluminum it uses from recycling scrap.
The company serves the aerospace and defense, transportation, packaging and industrial sectors with plates, sheets, extrusions, coils and precision sand castings.
On April 21, Constellium announced that it has entered into a multiyear agreement with Airbus SE (OTC: EADSY) to supply the aircraft manufacturer with aluminum alloy extrusions.
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5 Aluminum Stocks to Buy Amid the Iran Crisis originally appeared on usnews.com
