30th March 2026
Aluminium prices have surged toward four-year highs, with benchmark London Metal Exchange (LME) prices jumping as much as 6% (surpassing $3,400-$3,500/t) as of March 30, 2026, following Iranian missile and drone strikes on major aluminium plants in the UAE and Bahrain.
These attacks, coupled with the effective closure of the Strait of Hormuz to shipping, have created a significant supply crisis for a region that accounts for roughly 9% of global aluminium production.
Impact on Prices and Costs
Price Surge
Aluminium prices have risen sharply, with analysts warning of a potential move toward or beyond the 2022 record high of $4,073 per ton if disruptions persist.
High Premiums
Physical premiums, particularly for aluminium billets, have surged. European billet premiums have jumped 63% since the conflict began.
"Backwardation"
Spot prices have surged above futures, indicating immediate supply shortages.
Production Costs
The Middle East conflict has driven up energy prices, further boosting the cost of producing aluminium, which is an energy-intensive process.
Impact on Production and Supply
Direct Damage: Emirates Global Aluminium (EGA) reported "significant damage" at its Al Taweelah site in Abu Dhabi.
Operational Curtailments
Aluminium Bahrain (Alba) is assessing damage and has initiated a 19% reduction in capacity, while Qatar's Qatalum has slashed production by approximately 40%-60%.
Logistical Blockage
The blockade of the Strait of Hormuz is preventing the export of finished aluminium and the import of necessary raw materials like alumina.
Force Majeure
Major producers like Alba have declared force majeure, defaulting on delivery contracts.
Long-Term Impact
If production lines are fully shut down due to damage or lack of materials, restarting them can take six to twelve months.
Regional and Global Consequences
Europe at Risk: Europe is highly exposed, importing around 30% of its aluminium from the Gulf, with premiums there rising steeply.
US Impact
The UAE is a major exporter to the US, and supply chain disruptions are threatening U.S. manufacturers, particularly for high-purity aluminium.
Inventory Depletion
Global aluminium inventories were already low, meaning this shock could lead to rapid shortages, with some estimates suggesting only 45 days of consumption covered by inventory.