The war in Iran and the accompanying shipping bottleneck are triggering a historic crisis in the aluminum market. Two Gulf aluminum smelters were damaged in missile strikes: Emirates Global Aluminium's Al Taweelah plant in the UAE, and Aluminium Bahrain (Alba), the largest production plant outside of China. Al Taweelah will take a year to repair, according to Reuters metals columnist Andy Home.
The Middle East is a major export hub, accounting for around 9% of global primary aluminum supply. Gulf Cooperation Council countries produce around 6 million tonnes per year of primary aluminum, with the majority exported through the Strait of Hormuz to Europe, Asia, and North America. With the Strait severely restricted, those exports have effectively been halted.
Qatalum in Qatar has also curtailed production following gas supply interruptions. Mercuria commodities analyst Nick Snowdon described the scale of the supply shock as 'probably the largest single supply shock a base metals market has suffered in the post-2000 era.' JPMorgan analysts warned the aluminum market is descending into a 'black hole' with a 'serious and prolonged supply outage.'