The escalation of the situation in the Middle East not only disrupts the energy market but also begins to impact the global metal supply chain. Recently, Aluminium Bahrain (Alba), a major aluminium producer in the region, announced that due to the disruption of shipping through the Strait of Hormuz, it has shut down three electrolytic production lines, equivalent to a reduction of about 19% of its aluminium smelting capacity, in order to maintain operational stability.
Alba stated that the 1st, 2nd and 3rd electrolytic production lines have been shut down. The company is carrying out a "controlled and safe shutdown procedure" to optimize the use of raw material inventory and prioritize the stable operation of the 4th, 5th and 6th production lines. The company has an annual production capacity of approximately 1.62 million tons and is one of the largest single-site aluminum smelters in the world.
Since the outbreak of the Middle East war, the Strait of Hormuz has almost come to a standstill, causing a large number of cargo ships to be unable to pass through normally. Alba had previously declared force majeure in early March because it was unable to deliver aluminum products to customers normally. At the same time, the transportation of bauxite, a key raw material for aluminum smelters, has also been severely affected, putting the production supply chain under great pressure.
Energy supply has also become a limiting factor. Aluminium smelting is an extremely power-consuming industry, and some natural gas supplies in the Middle East have been disrupted due to the war. For instance, Qatalum, an aluminium plant in Qatar, has started to reduce production after its natural gas supply was suspended. Currently, it is operating at only about 60% of its capacity.
The Middle East is a significant base for global aluminum production, accounting for approximately 9% of the world's supply. As the impact of the war expands, market concerns over supply disruptions have rapidly pushed up aluminum prices. Recently, the aluminum price on the London Metal Exchange once rose to $3,546.50 per ton, reaching a new high in nearly four years.
Alba stated that during the production halt, the company will carry out maintenance and inspection of the equipment, including cleaning and system upkeep, to prepare for the resumption of production in the future. Meanwhile, the company is in close communication with suppliers and customers to minimize the impact on contract fulfillment.
Market players believe that if the Strait of Hormuz remains blocked for a long time, the aluminum supply chain in the Middle East may face greater pressure, and the global aluminum market may further tighten. For manufacturing industries that rely on imported metal raw materials, this could mean rising costs and an increased risk of supply instability.
