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Aluminium producer Alcoa Corporation (ASX:AAI) jumped over +7% to $92.30/sh on Monday as it became the latest victim-beneficiary of the Iran War following Iranian strikes on aluminium plants in neighbouring countries hosting U.S. bases.
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Alcoa Corp investors are effectively putting their money into that stock on the back of aluminium futures rising after the attacks – intraday gains for AAI ranged around the +6% mark, which loosely (and perhaps coincidentally) tracks a +6% jump in aluminium prices on metals markets.
Facilities in the UAE and in Bahrain were hit over the weekend, and Iran’s IRGC – effectively the voice of the Ayatollah’s ideology and its enforcement arm – claimed responsibility.
Emirates Global Aluminium flagged “significant” damage as a result of the attacks; Aluminium Bahrain said it will assess the damage. All in all, the Middle East makes up roughly ~9% of global aluminium supply.
To date, Aluminum futures on the U.K.’s London Metal Exchange (LME) are only up +2.5% over the last month, but traders are now expecting that to climb higher this week. In the background, Guinea also wants to limit bauxite exports, too – the feedstock for aluminium – adding to the thesis that there’s gonna be a supply crunch due to these attacks.
Thus, investments and trades flow into AAI. Alcoa’s WA refineries, according to its website, can supply up to 8% of the global aluminium market. (Albeit at the expense of much-needed forest in the state that often claims daily world’s hottest records, and right near the capital city’s major drinking water, too.)
Alcoa recently moved to halt expansion of its exploration and mining works in apparent response to environmental concerns, though if aluminium prices spike further, one can expect that to be quietly reversed.
Notably, Alcoa struck an 8Y supply deal with Emirates Global back in CY23, the latter being one of the companies hit by Iran over the weekend.
AAI last traded at $91.83/sh.
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