BAHRAIN – APRIL 17: Aluminium ingots seen at the Aluminium Bahrain B.S.C plant in Bahrain, Tuesday, April 18, 2006. (Photo by Phil Weymouth/Bloomberg via Getty Images)
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Aluminum closed in on prices not seen since 2022 following Iranian attacks on two Middle Eastern producers over the weekend, heightening fears of a supply crisis for the industry.
Futures prices on the London Metal Exchange initially jumped 5.5% on Monday to briefly touch $3,492 per tonne, a price last seen in April 2022.
It pulled back slightly by Monday afternoon to land 3.5% higher at $3,381 per tonne. Aluminum has risen around 10% since the conflict began on Feb. 28, though it fell briefly last week alongside most other asset classes amid fears of a global recession.
Emirates Global Aluminium (EGA) and Aluminium Bahrain, two of the Gulf’s largest producers, came under fire from Iranian drones and missiles on Saturday.
EGA said in a statement that its Al Taweelah smelter sustained “significant” damage in the strikes, injuring several people.
“The safety and security of our people is our top priority at all times,” CEO Abdulnasser Bin Kalban said. “We are deeply saddened and are assessing the damage to our facilities.”
‘Shockwaves’ through the global market
Saturday’s attacks only served to darken the outlook for commodity firms in the region, which have faced severe supply disruption over the past month.
Around 9% of global aluminum supply comes from the Gulf, and most firms there have been unable to export the metal beyond the region since Iran effectively closed the Strait of Hormuz. EGA’s damaged smelter produced 1.6 million tons of cast metal in 2025, according to its statement.
“The attacks have sent shockwaves through the global aluminum market, raising the risk of a supply crisis that could reshape the industry,” April Kaye Soriano, aluminum research analyst at S&P Global Energy, told CNBC over email.
She added that, if the damage proves lasting, the market could move away from any temporary softness and begin to reflect expectations of tighter supply and higher prices.
Joyce Li, commodities strategist at Macquarie Group, told CNBC over email that their base case before the attacks assumed a cut to the current running capacity of approximately 20%, which amounts to roughly 800 to 900 kilotons of production loss in 2026.
Li said Macquarie saw this disruption as sufficient to push the global market into a full-year deficit, adding added that they were closely monitoring the “fluid” situation for any changes.
The role of China
Aluminum is an essential material across electronics, transport, and construction, as well as other industries such as solar panels and packaging.
China is the world’s biggest producer of aluminum and tends to keep production constrained at 45.5 million tons per year to reduce emissions and prevent overcapacity. Some analysts believe the country has a role to play in unlocking supply to the wider market.
“If the Chinese government decides that the prices are too high, they can restart a number of idle smelters in the country and the world will be full of 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 ramp up supply is “limited.”
“While there is some capacity to increase output, the global market remains exposed to further shocks, especially if the conflict spreads to other metal supply chains,” she added.