On August 27, 2026, in the derivatives market, aluminum futures on the Shanghai Futures Exchange showed slight volatility. The most-traded aluminum contract for October delivery dropped by 0.21% by the end of Thursday's daytime trading but increased by 0.52% overnight, closing the nighttime session at Yuan 23,830/tonne as of 1 a.m. Friday, August 28, 2026.
Iranian officials indicate mediators have asked Iran to propose conditions for opening the Strait of Hormuz; Tehran is preparing a related list of conditions and denies plans to assassinate Trump's youngest son. Iran–Oman diplomatic mediation is showing initial results, with Hormuz shipping volumes quietly recovering to 75% of pre-war levels. White House: No negotiations are currently underway; all options are on the table.
For aluminum prices, the recovery in Hormuz transit to 75% of pre-war levels and progress in Iran–Oman mediation lead the market to price in a weaker expectation of production cuts across Gulf-region aluminum (about 8%–9% of global capacity) and a resumption of finished-product exports, so the risk premium previously priced into LME aluminum on the "strait blockade and feedstock cutoff for Middle East smelters" narrative faces unwinding.
However, the White House's hardline stance of "no talks, all options on the table," combined with Iran linking the strait's opening to the U.S. lifting sanctions, shows that navigation remains temporary and reversible, that restart is a slow 6–12 month variable (pot-line restart cycles are long), and that LME aluminum stocks near 250,000 tonnes are at lows not seen since the 1990s, so this is premium retracement rather than a trend reversal. SHFE aluminum is more resilient than LME aluminum thanks to the domestic capacity ceiling, traders' inventories destocking, and peak-season restocking support; LME aluminum faces pressure overhead while SHFE aluminum holds a high-level range.
On August 27, 2026, Mysteel's daily price assessment showed that the market price for A00 aluminum with a minimum purity of 99.7% in China was Yuan 23,920/tonne, up Yuan 50/tonne from the previous day; in South China Yuan 24,160/tonne, up Yuan 30/tonne from the previous day; and in Central Plains Yuan 23,820/tonne, up Yuan 30/tonne from the previous day.
Fundamentally, in the short term, driven by the restoration of Hormuz navigation, the non-ferrous metals sector closed higher. The geopolitical premium of LME aluminum is being unwound, resulting in relatively weak performance; in contrast, SHFE aluminum demonstrates greater resilience, supported by the domestic capacity ceiling and continuous inventory drawdowns, with the ratio trade continuing to normalize.
SHFE aluminum traded firm in an upward oscillation during yesterday's morning session. The East China spot market stabilized, with inventories drawing down and expectations of inter-regional supply allocation leading the market to believe that available circulating material may tighten ahead. Most traders chose to hold offers firm with few markdowns, slowing their sales pace. Downstream buyers chased the rally with steady restocking, and intermediary traders gradually turned more upbeat, re-entering to source material, and overall trading conditions improved on a stable footing.
In South China, the basis ran high; futures-spot arbitrageurs were active sellers, but intermediary uptake stayed cautious and end-user plants mostly replenished on rigid needs, leaving overall turnover mediocre.
A sustained recovery in Hormuz transit capacity points to further unwinding of LME aluminum's geopolitical premium, keeping it under near-term pressure, while SHFE aluminum is expected to maintain its relative resilience and trade rangebound, supported by a domestic capacity ceiling and ongoing destocking. Overall, aluminum prices will remain hostage to the pace of Middle East supply restarts and the strength of peak-season physical demand.
