Middle East War Pushes LME Aluminum Prices to Four-Year High, Squeezing Chip Equipment Profit Margins
0xBroomberg
LME spot aluminium closed at $3,767.68/t on May 29 — the highest since March 2022, up roughly 27% year-to-date; the Middle East conflict has idled nearly half the region's output, though chipmakers say overall cost impact remains limited.
Why did aluminium suddenly hit a four-year high?
LME spot aluminium settled at $3,767.68/t on May 29, up about 26.94% in 2026.
The core driver is the Middle East war: the region previously supplied roughly 7% of global aluminium, and conflict has shut down nearly half of that capacity.
This means → global aluminium supply lost roughly 3.5 percentage points overnight — a gap hard to close quickly.
Where exactly did Middle East supply break?
Emirates Global Aluminium (EGA) — the region's largest producer — saw output plunge as facilities were hit by the conflict.
The Strait of Hormuz (the chokepoint linking the Persian Gulf to open sea) is disrupted, blocking both alumina imports and finished-aluminium exports.
Smelters in Bahrain and Qatar have also cut output sharply. In plain terms = it is not just factories damaged — the shipping lane in and out is blocked too.
Can China fill the gap?
Some Chinese smelters briefly ran above rated capacity to cover the Middle East shortfall.
Beijing then launched a nationwide energy-consumption and carbon-emissions inspection of key industries, forcing domestic aluminium plants to cut output.
This means → the world's largest aluminium producer not only failed to ramp up, it contracted — widening the supply-demand gap further.
Will chip-equipment makers take a hit from aluminium prices?
Higher aluminium prices have already lifted quotes for equipment housings, vacuum chambers, rollers and nozzles.
Metal parts account for only a low-single-digit percentage of total semiconductor-equipment cost — far less than control chips and other major items.
Taiwanese suppliers have largely shifted to advanced-node and advanced-packaging work, where pricing is supported by patents and feature upgrades and gross margins are relatively high; most prefer to absorb the cost increase rather than raise prices for now.
How far is the price from its all-time record?
In March 2022, the Russia-Ukraine war plus post-pandemic supply-chain chaos sent LME aluminium to a record $4,073.5/t.
The current price is still roughly 8% below that peak.
This reflects a rally that is sharp but has not reached "extreme panic" territory — the 2022 spike was an energy crisis and supply-chain breakdown stacked on top of each other.
Content is for reference only, not financial advice.