London Aluminum Spread Hits 2007-Level Backwardation as Hormuz Blockade, EGA Force Majeure Grip Market

A critical aluminum futures spread on the London Metal Exchange has surged into its most extreme backwardation since 2007, a stark signal of immediate supply panic. The market convulsion follows the activation of a U.S.-led Strait of Hormuz blockade and a force majeure declaration from the region's largest producer, Emirates Global Aluminum (EGA). Aluminum prices jumped 1.4% to $3,547 per ton, hitting a four-year high as traders priced in severe and imminent shipment disruption risks from the Gulf.

The immediate trigger is a dual shock. First, President Trump's announced blockade of the Strait of Hormuz, a critical chokepoint for global commodity flows, was set to take effect, directly threatening aluminum shipments. Second, and compounding the crisis, EGA—the Gulf's dominant producer—declared force majeure on parts of its contract book over the weekend. This followed an operational halt at its massive Al Taweelah smelter, reportedly due to security incidents involving Iranian missiles and drones, which has physically removed supply from the market.

This event is not an isolated spike but the peak of a war-driven metals rally that has seen aluminum surge roughly 18% year-to-date. The extreme backwardation—where near-term contracts trade at a steep premium to later dates—indicates traders are scrambling for physical metal now, fearing a prolonged squeeze. The situation places immense pressure on global manufacturers and supply chains dependent on Gulf aluminum, with the market's structure suggesting the stress is acute and centered on securing immediate delivery, not future speculation.