Persistent conflict in the Persian Gulf continues to disrupt global commodity markets, with the aluminum industry facing a previously underestimated supply risk: petroleum coke. According to recent analysis, a new research report from JPMorgan warns that approximately 20% of the global supply of this key raw material for aluminum smelting is directly impacted by the blockade of the Strait of Hormuz. An escalation of this shortage could further impact aluminum smelting capacity outside the Gulf region, tightening the already supply-deficient global aluminum market.

JPMorgan's commodities research team had previously forecast a global aluminum supply deficit of around 2 million metric tons by 2026. In a report dated May 5th, the bank pointed out that petroleum coke prices have so far risen only about 21%, significantly less than the over 50% increase for Brent crude or the over 80% rise in jet fuel prices, indicating the market has not yet fully priced in this risk. A worsening petroleum coke shortage would exert renewed upward pressure on aluminum prices.

Based on this assessment, JPMorgan maintains overweight ratings on Norsk Hydro, Aluminum Corp. of China, China Hongqiao, Press Metal, Vedanta, and Hindalco, believing these companies will benefit from the positive leverage effect of rising LME aluminum prices.

Petroleum coke is an indispensable, yet often overlooked, raw material in the aluminum smelting process. In the Hall-Héroult electrolytic process, carbon anodes are made from a mixture of calcined petroleum coke (CPC) and coal tar pitch. These anodes are continuously consumed within the electrolytic cells and must be regularly replenished. Producing one ton of aluminum requires approximately 0.4 to 0.5 tons of carbon anode material.

In terms of market structure, about 80% of global green petroleum coke is fuel-grade, primarily used in the cement industry. The remaining 20% is calcining-grade, a higher-quality variety essential for aluminum and steel production. While the aluminum and metals sector accounts for only about 8% of total global green petroleum coke demand, it represents roughly 40% of the calcined petroleum coke sub-market, making it the largest single consumer group.

Furthermore, the petroleum coke market is relatively small, lacks transparency, and has low financialization, leaving consumers with few effective price hedging tools and making it particularly vulnerable to supply shocks.

The ongoing blockade of the Strait of Hormuz is impacting the global aluminum supply chain through multiple channels. The Middle East accounts for about 40% of global crude oil supply, with the Persian Gulf contributing around 20%. Crude shortages have already led to reduced refinery output in several regions, consequently affecting the supply of petroleum coke, a by-product of oil refining.

An estimated 20% of global petroleum coke supply is directly affected by the Strait of Hormuz blockade. Regionally, Asia-Pacific accounts for about 35% of global calcined petroleum coke supply, but its high dependence on crude imports from the Gulf means the actual impact could be more severe.

Simultaneously, the Gulf region itself hosts approximately 7 million tons per year of aluminum smelting capacity, representing about 9% of the global total. Attacks on two smelters have already disrupted roughly 3% of global aluminum production capacity. Additionally, the region typically needs to import about 8 million tons of alumina—another key aluminum smelting ingredient—annually via the Strait of Hormuz, supplies which are now jeopardized by the blockade.

Should the conflict subside, refinery capacity recovery could outpace the restart of aluminum smelting capacity, as repairs to damaged smelters might take 12 to 18 months, creating a more complex market dynamic where petroleum coke supply recovers while aluminum production remains offline.

An analysis of Q1 2026 earnings reports and industry surveys reveals a mixed picture from major aluminum producers regarding petroleum coke supply: no immediate shortages, but clear cost pressures.

Alcoa indicated that the Gulf region is typically a net importer of petroleum coke, bringing in about 1 million tons of calcined coke annually, meeting roughly one-third of local demand, with local calcining plants operating near capacity. The company holds 1 to 2 months of inventory, uses quarterly pricing mechanisms, and disclosed that a $10 per ton change in petroleum coke price translates to an annualized cost sensitivity of approximately $8 million. During its Q1 earnings call, Alcoa warned that disruptions around the Strait of Hormuz are increasing the cost and uncertainty of importing anodes, calcined coke, and coal tar pitch, with higher green petroleum coke prices expected to gradually feed through after Q2.

Norsk Hydro stated that most of its petroleum coke procurement contracts are for 1 to 2 years with quarterly price reset mechanisms, and currently there are no shortages of petroleum coke or carbon anodes at its smelters. Press Metal, which sources prebaked anodes from suppliers like those in Shandong and maintains about 1.5 to 2 months of inventory, also reported no current supply issues. Chinese smelters like Aluminum Corp. of China typically purchase prebaked anodes directly, giving them limited visibility into the upstream petroleum coke market. China Hongqiao holds around one month of prebaked anode inventory sourced from multiple domestic suppliers, describing supply as stable with moderate price increases that are easily absorbed at current aluminum price margins.

From a cost perspective, carbon-related costs (including petroleum coke) account for 15% to 20% of the C1 cash cost of aluminum smelting. Specifically, carbon costs represent about 18% for Norsk Hydro and 16% for Alcoa.

Reducing or eliminating dependence on petroleum coke is a central goal of the aluminum industry's decarbonization pathway. However, JPMorgan believes the industry will remain highly reliant on it in the near to medium term.

In the inert anode technology space, ELYSIS—a joint venture between Rio Tinto and Alcoa—achieved a milestone in November 2025 by starting the first commercial-scale inert anode cell at the Alma smelter in Quebec. This technology emits oxygen instead of carbon dioxide and does not consume petroleum coke. Rusal also announced in August 2025 the first stable production of P1020 standard aluminum ingots using inert anode technology.

Norsk Hydro is pursuing a different path. Adopting a relatively cautious stance towards inert anodes, the company is exploring carbon capture and storage (CCS) as a transitional solution for existing smelters. It is collaborating with MIT spin-off Verdox to trial electrochemical carbon capture technology at its Sunndal smelter, targeting a first commercial project by 2029. Its long-term HalZero technology aims to pre-convert alumina to aluminum chloride before electrolysis, retaining chlorine and carbon in a closed loop and emitting only oxygen.

During its Q1 2026 earnings release, Norsk Hydro confirmed the successful commissioning of a HalZero test facility but emphasized the technology remains in early development, better suited for new greenfield smelter projects. The company is also exploring the replacement of petroleum coke and coal tar pitch with bio-based materials, though these efforts also remain in the R&D phase.