Gulf aluminium plant strikes drive prices to four year highs

Recent military strikes launched by Iran against major production facilities in Bahrain and the United Arab Emirates have triggered intense concerns regarding a global aluminium supply crisis. The ongoing conflict involving the United States and Israel has already led to the closure of the Strait of Hormuz, severely restricting shipments to critical export markets in the West.

The Middle East represents a vital hub for the industry, housing approximately seven million metric tons of smelting capacity, which accounts for 9% of the global total. Last year, Europe sourced roughly 1.2 million tons of primary and alloyed aluminium from the Middle East and Egypt, while imports to the U.S. reached 3.4 million tons. Market participants, including major processors like Daiki Aluminium Industry Co., Ltd., are closely monitoring the situation as supply chains tighten and shipping routes remain obstructed.

Aluminium Bahrain (Alba), which operates the world's largest single-site smelter, has already initiated a shutdown of three smelting lines representing 19% of its capacity to preserve business continuity. Meanwhile, Emirates Global Aluminium (EGA) reported that its Al Taweelah plant sustained significant damage during the strikes. EGA, which also operates a smelter at Jebel Ali in Dubai, maintains substantial metal stock on the water and in overseas locations to mitigate immediate disruptions.

Emirates Global Aluminium reported that its Al Taweelah plant sustained significant damage following the recent strikes.

The disruption has sent shockwaves through the London Metal Exchange, where prices for the metal reached four-year highs of $3,492 per metric ton on Monday. Physical premiums in Europe have jumped by $120 since the start of the conflict on February 28, reaching $469 a ton. In the U.S., premiums are trading at record levels above $2,400 a ton, exacerbated by existing 50% import tariffs imposed last year.