Aluminum prices are surging. Here’s how companies are handling the costs
Aluminum prices have surged to multiyear highs in the aftermath of the Iran war, causing significant cost pressures for various industries that rely on this commodity. From car manufacturers to beverage companies, the rising cost of aluminum is impacting their bottom line.
According to Bernstein analyst Bob Brackett, the shutdown of the key passageway for aluminum delivery from the Middle East, the Strait of Hormuz, has contributed to the spike in prices. Approximately 7% of the world’s aluminum is sourced from this region, and military strikes have disrupted facilities and taken about 3% of the global supply off the market.
One of the industries feeling the impact is the automotive sector, with Ford’s Chief Financial Officer Sherry House expressing concerns about the outlook for aluminum, a key component of their F-150 pickup truck. The automaker is facing commodity headwinds that are expected to exceed $2 billion, double the previous estimate, mainly due to the increase in aluminum prices.
Similarly, Molson Coors’ finance chief Tracey Joubert revealed that the rising price of aluminum has added around $30 million to the cost of goods sold in the first quarter compared to the previous year. The company, known for its Coors Light and Miller Lite brands, anticipates further inflation in the current quarter.
Keurig Dr Pepper’s CFO, Anthony DiSilvestro, also highlighted the impact of higher aluminum prices on their products. He mentioned that the company, which produces brands like Canada Dry and Snapple, will need to create mitigation plans to protect margins if these cost increases persist.
Despite these challenges, UBS analyst Joseph Spak believes that Wall Street’s concerns about aluminum prices are exaggerated. He noted that Ford has hedged its exposure to aluminum for this year, providing some level of protection against price fluctuations.
Looking ahead, UBS expects aluminum supply to grow by only 0.3% in 2026, down from a previous estimate of 2.4%. The bank attributes this decrease to disruptions in the Middle East and limited capacity increases in Europe. Additionally, Brackett from Bernstein pointed out that the rising cost of natural gas and coal, which are essential for aluminum production, is further adding to the price pressure.
In conclusion, the aluminum market is facing significant challenges due to the Iran war, with various industries feeling the impact of rising prices. Companies are strategizing to mitigate these cost pressures and protect their margins in the face of ongoing uncertainty in the commodity market.
