Hindalco halts aluminum product sales amid Iran war

Hindalco Industries Ltd has notified customers that it's suspending sales of extruded aluminum products, in a sign of the broadening impact that the Iran war is having on the metal's global supply chain.

The conflict has already prompted some aluminum smelters in West Asia to suspend sales due to the effective halt on shipping through the Strait of Hormuz, but manufacturers and industrial businesses in India are also facing disruptions to gas supplies transiting through crucial waterway.

As the supply-chain turmoil grows, Hindalco has invoked force majeure clauses in supply contracts with buyers of its extruded aluminum products, according to people familiar with the matter, who asked not to be identified because the communications were private. The products are used in an array of industries including car-making and construction.

A spokesperson for Hindalco didn't immediately respond to a request for comment.

Hindalco makes extruded products from commodity-grade metal sourced from smelters in India, and those smelters are operating as normal, the people said. While smelting aluminum ingots requires huge amounts of electricity, a reliable supply of gas is also crucial in order to transform them into end-use products.

Hindalco's suspension of extruded product sales comes as analysts and traders warn that the global aluminum market could face severe shortages unless shipping through the strait resumes soon. Some West Asian producers have already declared force majeure due to disruptions to outbound shipments, and there are expectations that they will soon need to start cutting output unless they can bring in additional raw materials through the strait.

Aluminum prices have surged since the conflict began, with futures hitting the highest in nearly four years on Thursday on the London Metal Exchange. In physical markets from Asia to the US, manufacturers are paying rising premiums over the LME benchmark to obtain spot supplies at short notice, while traders have been racing to withdraw stockpiles from the LME.
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