Aluminum Set to Jump as Iran Hit Middle East Producers

Aluminum futures in the UK are expected to rise sharply on Monday after two major aluminum production sites in the Middle East were hit by Iranian strikes, heightening fears of prolonged supply disruptions. Emirates Global Aluminium, the region’s top producer, reported “significant damage” at its Abu Dhabi facility, while Aluminium Bahrain said it was assessing the extent of the damage to its plant. Earlier this month, Alba had already shut down 19% of its 1.6-million-tonne-per-year capacity due to shipping disruptions in the Strait of Hormuz. The Middle East accounts for roughly 9% of global supply, and these attacks raise the risk of a more acute supply squeeze, even if maritime traffic through the Strait eventually normalizes. Adding further uncertainty, Guinea, the world’s largest bauxite supplier, is considering the introduction of export quotas, which could tighten raw material availability for global smelters.

Aluminum futures in the UK held near $3,250 per tonne, holding the retreat from a near four-year peak reached on March 12th as traders assess supply developments and demand prospects. Production has risen in some regions, with Alvance British Aluminium boosting output at its Lochaber smelter by about 10% following US tariff changes. Global inventories are now above 1.3 million tons, the highest since 2020, underscoring ample supply. On the demand side, China’s imports have fallen despite a 3% increase in domestic production during the first two months of the year. Still, the downside for prices remains limited due to supply disruptions caused by the conflict in the Middle East, a region responsible for around 9% of global supply. Bahrain’s Alba, the world’s largest single-site aluminum producer, shutdown 19% of its 1.6 million tonne-a-year production capacity while Qatalum reduced operations. Adding further uncertainty, Guinea is actively considering introducing bauxite export quotas.

Aluminum futures in the UK fell below $3,250 per tonne, extending their retreat from a near four-year high, amid rising concerns about the potential impact of the ongoing Middle East conflict on metals demand. Analysts noted that demand from China, the world's largest producer and consumer, still lags the previous year due to higher aluminum prices, even as operating rates among fabricators have picked up following the Lunar New Year holiday. Prices had surged this month after the US-Israeli strikes on Iran led to shutdowns and shipping disruptions in a region responsible for roughly 9% of global supply. Recently, Bahrain’s Alba, the world’s largest single-site aluminum producer, shutdown 19% of its 1.6 million tonne-a-year production capacity, while Qatar also halted part of its production due to natural gas shortages.