Iran war threatens aluminium supply as outages deepen, prices surge

The Middle East conflict could remove up to 3–3.5 million tonnes of aluminium output, about 5% of global supply, and put nearly another 7 million tonnes at risk, tightening a market already heading towards deficit, Wood Mackenzie says.

The disruption, now in its fifth week, has exposed the vulnerability of smelters of smelters clustered along the Strait of Hormuz, which account for about 18% of global aluminium exports outside China, with 80–85% of that output destined for overseas markets, the Edinburgh-based consultant said on Wednesday.

“The Strait of Hormuz is effectively a chokepoint for the global aluminium market. Disruptions here could cut off up to 60% of alumina supply to Middle Eastern smelters, rapidly deepening the market deficit,” WoodMac principal analyst Charvi Trivedi said. “The longer the conflict persists, the more difficult it becomes for producers to sustain operations, with risks increasingly skewed toward further supply losses and higher prices.”

The outages are already rippling through global markets, pushing aluminium prices towards their biggest monthly gain since 2018. They are also raising the risk that temporary disruptions become lasting supply losses as damaged smelters take months or years to restart. Aluminium prices have climbed from about $3,100–$3,300 per tonne before the conflict to near $3,500, adding roughly $200–$400 per tonne on supply disruption fears.

Missile strikes

Operations across the Gulf have been hit directly. Emirates Global Aluminium’s Al Taweelah plant was struck, damaging power infrastructure and halting output, while Aluminium Bahrain has shut about 19% of capacity due to alumina shortages and is expected to run near 30% utilization after sustaining damage in a March 28 attack. Qatar’s Qatalum is operating at roughly 60% capacity, and Saudi Arabia’s Ma’aden has been supplying emergency alumina to neighbouring smelters.

Analysts warn uncontrolled shutdowns could worsen the impact. If molten aluminium solidifies in potlines during outages, plants can take at least a year to repair, effectively removing capacity from the market rather than delaying output.

“What this disruption highlights are how concentrated and fragile aluminium supply chains have become,” WoodMac principal analyst Uday Patel said. “With so much production and export infrastructure tied to a single trade route, even short-term disruptions can have outsized and immediate global consequences.”

The Middle East is a key supplier to markets including Japan, South Korea, Turkey and Mexico, leaving sectors such as automotive, construction and packaging exposed as primary metal tightens and physical premiums rise.

Global backdrop

The crisis is unfolding against a more complex global backdrop. Indonesia’s state aluminium producer has warned of oversupply risks and called for a moratorium on new refineries, highlighting how capacity growth elsewhere is poorly aligned with disruptions in the Gulf. Even with incremental supply from China, India and Russia, including Rusal, analysts say replacement volumes would fall short of Middle Eastern losses.

In North America, governments and producers are moving to rebuild domestic capacity after decades of decline. In February, Emirates Global Aluminium and Century Aluminum (Nasdaq: CENX) agreed to build the first new primary aluminium smelter in the United States since 1980. The Oklahoma Primary Aluminum project is expected to produce 750,000 tonnes annually and double U.S. primary output, though construction is not set to begin until late 2026.

Producers such as Rio Tinto (LSE, ASX, NYSE: RIO) and Alcoa (NYSE: AA) dominate existing smelting capacity in Canada and the U.S. Canada remains a key supplier, with Quebec hosting eight of the country’s nine smelters, including operations run by Rio Tinto and Aluminerie Alouette, and exporting about $10.8 billion worth of aluminium annually, much of it to the United States, though tariffs last year pushed some shipments towards Europe.