Alumninum prices rise after Iran attacks Gulf smelters
BAHRAIN – APRIL 17: Aluminum ingots seen at the Aluminum Bahrain BSC facility in Bahrain, Tuesday, April 18, 2006. (Photo: Phil Weymouth/Bloomberg via Getty Images)
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Aluminum closed at prices not seen since 2022 following Iran’s attacks on two Middle Eastern producers over the weekend, raising fears of a supply crisis for the sector.
Futures prices on the London Metal Exchange initially rose 5.5 percent on Monday, briefly touching $3,492 a tonne; This price was last seen in April 2022.
It pulled back slightly on Monday afternoon, rising 3.5% to $3,381 per ton. Aluminum has risen nearly 10% since the conflict began on February 28, but suffered a brief decline last week along with most other asset classes amid fears of a global recession.
Emirates Global Aluminum (EGA) and Aluminum BahrainIran, two of the Gulf’s largest producers, came under attack from Iranian drones and missiles on Saturday.
EGA said in a statement that the Al Taweelah smelter suffered “significant” damage in the strikes and many people were injured.
“The safety and security of our people is always our top priority,” said CEO Abdulnasser Bin Kalban. “We are very sorry and are assessing the damage to our facilities.”
‘Shock waves’ in the global market
Saturday’s attacks only darkened the outlook for commodity firms in the region, which have faced severe supply disruptions for the past month.
About 9% of global aluminum supply comes from the Gulf, and most firms there have been unable to export the metal outside the region since Iran effectively closed the Strait of Hormuz. According to EGA’s statement, the damaged smelter produced 1.6 million tons of bulk metal in 2025.
“The attacks sent shockwaves through the global aluminum market, increasing the risk of a supply crisis that could reshape the industry,” S&P Global Energy aluminum research analyst April Kaye Soriano told CNBC via email. he said.
He added that if the damage is permanent, the market may move away from temporary softness and begin to reflect expectations that supply will tighten and prices will rise.
The baseline scenario before the attacks assumed a roughly 20% cut in current operating capacity, corresponding to a production loss of roughly 800 to 900 kilotonnes in 2026, Macquarie Group commodity strategist Joyce Li told CNBC via email.
Macquarie sees this disruption as enough to push the global market into deficit for the entire year, Li said, adding that they are closely monitoring the “fluid” situation for any changes.
China’s role
Aluminum is an important material in electronics, transportation and construction, as well as other industries such as solar panels and packaging.
China is the world’s largest aluminum producer and tends to keep production limited to 45.5 million tonnes per year to reduce emissions and avoid overcapacity. Some analysts believe the country has a role to play in freeing up supplies to the broader market.
“If the Chinese government decides that prices are too high, it can restart a number of idle smelters in the country and the world will be flooded with aluminum,” Artem Volynets, CEO of miner ACG Metals, told CNBC’s Europe Early Edition on March 18.
S&P Global’s Soriano, on the other hand, believes China’s ability to increase supply is “limited.”
“While some capacity exists to ramp up production, the global market will continue to be subject to further shocks, particularly if the conflict spreads to other metal supply chains,” he added.
