<p>Impacted by the disruption to the global aluminum supply chain caused by the conflict in the Middle East, aluminum prices are on track for their highest monthly gain in nearly two years, making them a rare bright spot in the general decline of metals in March.</p>
<p>Three-month aluminum on the London Metal Exchange rose 1.8% on Tuesday to $3,461.50 per ton, nearing the $3,500 mark. The cumulative gain this month is close to 10%, the largest monthly increase since April 2024. The conflict has led to the closure of the Strait of Hormuz, severely impacting about 10% of global aluminum production capacity in the Persian Gulf region and causing a sudden tightening of global supply.</p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/21edf5f9-186b-4590-aeb4-13df407dd73e.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/21edf5f9-186b-4590-aeb4-13df407dd73e.png"/></p>
<p>Iranian drones and missiles have struck facilities belonging to Aluminum Bahrain (ALBA) and Emirates Global Aluminium (EGA). While both companies have not yet disclosed specific loss details, the market widely anticipates an impact on supply-demand balance. Meanwhile, China, as the world's largest aluminum producer, has seen a significant increase in orders from other regions, and aluminum premiums in markets like Japan have also surged.</p>
<h2>Conflict Directly Hits Key Persian Gulf Aluminum Production Areas</h2>
<p>The Middle East is a significant hub for global aluminum production, with countries along the Persian Gulf coast contributing approximately 10% of the world's primary aluminum output, nearly all of which is for export. Following the closure of the Strait of Hormuz, this export route has been disrupted, causing a sudden shift in global aluminum trade flows.</p>
<p>According to media reports, Iranian drone and missile attacks have affected production facilities of ALBA and EGA. EGA's Al-Taweelah smelter in the UAE has an annual capacity of 1.6 million tons and is one of the world's largest single-site aluminum smelters. Currently, neither company has provided a clear statement on the extent of the damage, but market concerns about long-term production capacity continue to escalate.</p>
<p>ALBA has already experienced a production cut of about 20%, and the UAE's 1.6 million-ton smelter facility has also been affected. Coupled with ongoing production cut pressures in Europe, Africa, and other regions, the estimated potential global production cut is between 1.5 million and 2 million tons annually, and the trend of tightening supply is unlikely to reverse in the short term.</p>
<h2>Analysts Warn: Market Could Shift from Surplus to Significant Shortage</h2>
<p>Bernard Dadhah, an analyst at Natixis SA, stated in a research report that EGA's Al-Taweelah plant could face prolonged shutdown, <strong>which would shift the global aluminum market from an approximate supply surplus of 200,000 tons next year to a supply deficit of about 1.3 million tons. He also warned that if ALBA's facilities also suffer long-term damage, the supply gap will widen further.</strong></p>
<p>This potential reversal in supply and demand is the core logic behind aluminum's counter-trend strength in March, amidst a generally bearish market for metals. Base metals like copper, zinc, and nickel all recorded monthly declines in March, with copper prices falling by more than 8% for the month, on track for their largest monthly drop since June 2022, largely due to war-driven energy cost increases and a deteriorating global economic growth outlook. Aluminum, however, has been directly impacted far more than other metals due to its production being highly concentrated in the conflict zone.</p>
<h2>Demand Support Coupled with Tightening Supply Strengthens Aluminum Price Upside Logic</h2>
<p>While the supply side is under pressure, the demand side is also providing strong support. The rigid demand for aluminum from infrastructure construction and the new energy sector continues to exist, providing a fundamental basis for rising aluminum prices.</p>
<p>Supply disruptions have already triggered a chain reaction in trade. Premiums for aluminum in traditional import markets like Japan have surged, and buyers are increasing their purchases of Chinese products.</p>
<p>According to Xinhua News Agency, citing a report by The Wall Street Journal on the 30th, U.S. President Trump told his staff that he was willing to end military action against Iran, even if the Strait of Hormuz remained largely closed. This statement led to a stabilization of most metal prices on Tuesday, but supply concerns in the aluminum market did not dissipate, and prices remained high. Market participants generally believe that uncertainty in aluminum supply will continue to drive price movements until the situation in the Middle East becomes clearer.</p>

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<p>The closure of the Strait of Hormuz has cut off export channels for about 10% of global aluminum production capacity in the Persian Gulf. Aluminum Bahrain (ALBA) has reduced production by over 20%, and the UAE's 1.6 million-ton smelter facility has been damaged. Natixis SA warns that the global market could shift from a surplus of 200,000 tons to a deficit of 1.3 million tons. Aluminum prices have gained nearly 10% this month, marking the largest monthly increase in nearly two years, and standing out as a rare gainer amidst a broad decline in metals in March</p>

- The global aluminum supply chain is impacted by the conflict in the Middle East, driving aluminum prices to a near two-year high amid declining metal markets.  
- The London Metal Exchange reported a 1.8% increase in three-month aluminum prices, approaching $3,500 per ton, with a monthly rise of nearly 10%, significantly affected by disruptions to production in the Gulf region.  
- Analysts warn that this shift could turn the market from a surplus of 200,000 tons to a shortage of approximately 1.3 million tons, with ongoing geopolitical tensions further influencing price stability.

Iran Disrupts Supply Chain, Aluminum Prices Set for Largest 10-Month Gain