---
title: "CITIC Securities: The escalating situation in the Middle East may catalyze an unexpected rise in aluminum prices"
type: "News"
locale: "zh-HK"
url: "https://longbridge.com/zh-HK/news/277696820.md"
description: "CITIC Securities released a research report indicating that with the escalation of the situation in Iran, the Middle East aluminum industry faces capacity and supply risks, which may lead to aluminum prices rising beyond expectations. Historical data shows that during the energy crisis of 2021-22, aluminum prices increased by 60%/100%. Currently, the blockade of the Strait of Hormuz and attacks on energy facilities may impact the aluminum supply chain, especially the production of electrolytic aluminum in the Middle East. The aluminum sector is expected to maintain a positive price outlook"
datetime: "2026-03-04T00:17:18.000Z"
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  - [zh-CN](https://longbridge.com/zh-CN/news/277696820.md)
  - [en](https://longbridge.com/en/news/277696820.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/277696820.md)
---

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# CITIC Securities: The escalating situation in the Middle East may catalyze an unexpected rise in aluminum prices

According to the Zhitong Finance APP, CITIC Securities has released a research report stating that the renewed conflict between Israel and Iran has significantly raised the risks associated with aluminum production capacity, shipping capabilities, and energy supply in the Middle East region. The subsequent disruptions in the aluminum industry chain in the Middle East and the risk of a secondary energy crisis overseas cannot be ignored. Reviewing the energy crisis of 2021-22, aluminum prices and sector gains reached a maximum increase of 60%/100%. Looking ahead, rising concerns about supply in the aluminum industry chain may lead to price increases beyond previous expectations. Coupled with the strong long-term supply-demand logic in the aluminum industry, there is a continued optimistic outlook for the price valuation of the aluminum sector.

**Key Events:**

On February 28, the situation in Iran entered a phase of military conflict. As of now, the situation in Iran is still rapidly changing. According to The Wall Street Journal, on March 2, Qatar announced that it had suspended LNG production at its Ras Laffan facility after intercepting two Iranian drones targeting its critical energy facilities. Additionally, tanker traffic through the Strait of Hormuz has nearly come to a standstill. These factors have led to a 45% surge in European LNG prices to €46/MWh, approaching the 51% level seen during the Russia-Ukraine conflict in 2022. According to CNBC, after Iran announced the blockade of the Strait of Hormuz, U.S. crude oil prices rose by 8% to $73 per barrel.

## CITIC Securities' main viewpoints are as follows:

**Risks of disruption in Middle Eastern electrolytic aluminum production.**

According to ALD and SMM, by 2025, the alumina production capacity in the Middle East is expected to be about 4.5 million tons per year, accounting for 2% of the global total; the electrolytic aluminum production capacity is expected to be about 6.92 million tons per year, accounting for 9% of the global total; and Iran's electrolytic aluminum output is expected to be about 620,000 tons, accounting for 0.8% of the global total. If surrounding energy infrastructure is attacked, there is a risk of production cuts or stoppages for the aforementioned capacities. Furthermore, according to Aladdin, if the Strait of Hormuz is blocked, apart from Saudi Arabia, which is basically self-sufficient in bauxite and alumina, the UAE and Iran are expected to import 2.8 million tons and over 500,000 tons of alumina respectively in 2023, facing risks of raw material supply interruption and electrolytic aluminum production cuts; Oman, Qatar, and Bahrain rely almost entirely on imported alumina to maintain their electrolytic aluminum production, mainly sourcing from Australia and India, with transportation routes primarily being "Indian Ocean - Strait of Hormuz - Persian Gulf." A blockade would lead to a complete interruption of alumina supply to these three countries, severely impacting the aforementioned aluminum plants.

**Concerns over the European energy crisis are escalating, which may catalyze significant increases in domestic and international aluminum prices.**

According to the U.S. Energy Information Administration, oil transportation through the Strait of Hormuz accounts for over 25% of global maritime oil trade; approximately 1/5 of global LNG trade is transported via the Strait of Hormuz in 2024. According to Reuters, on March 2, electricity prices in Germany and France rose by 12% and 109% respectively compared to last Friday. If the blockade of the Strait of Hormuz continues, oil and gas prices, as well as overseas electricity prices, may continue to rise significantly, making a secondary energy crisis possible. As one of the metals with the highest electricity density, changes in energy prices have a particularly profound impact on the aluminum industry. According to EMBER, China's energy import dependence is 20%, which is relatively low. China's energy prices also have advantages. If an energy crisis occurs again, the resulting overseas cost-push aluminum price increases will significantly enhance the profitability of Chinese aluminum companies **During the 2021-22 energy crisis, aluminum prices and sector gains reached 60%/100%.**

In 2021, the shutdown of nuclear power in Europe combined with Russia's reduction of natural gas supply led to soaring electricity prices, with some aluminum companies' electricity costs rising to 3 yuan/kWh. With the outbreak of the Russia-Ukraine conflict in February 2022, the energy crisis further worsened. As a result, from January 2021 to August 2022, according to EMBER and the IMF, European natural gas and energy prices increased by 858% and 627% respectively, reaching USD 70/MBtu and EUR 414/MWh (3.2 yuan/kWh), leading to the gradual shutdown of a total of 1.47 million tons/year of electrolytic aluminum capacity in Europe. Catalyzed by this, from 2021 to 2022, domestic and international aluminum prices saw maximum increases of 60%/89%, breaking through new highs of 23,674 yuan/ton and 3,841 USD/ton, with profits per ton of aluminum reaching a maximum of 7,000 yuan/ton, and the CITIC aluminum industry index achieving a maximum increase of 100%.

**The narrative of AI seizing electricity and supply disturbances is strengthening, and the consensus on the vulnerability of the aluminum supply chain may be reinforced.**

In terms of AI, in mid-February, Century Aluminum announced the sale of its Hawesville aluminum plant to digital infrastructure company TeraWulf; American Aluminum also announced plans to sell 10 facilities to data center companies. The squeezing substitution effect of AI data centers on the aluminum industry is gradually becoming tangible. Regarding disturbances, on February 12, Southern 32 reiterated that its aluminum plant in Mozambique would enter a maintenance shutdown next month. The shutdown of the Mozal project may represent the aluminum industry's "Cobre Panama" moment, and the market's consensus on the vulnerability of the aluminum supply chain may gradually increase.

**Continuing to be optimistic about investment opportunities in the aluminum sector.**

It is expected that the electrolytic aluminum industry will maintain a tight balance under the trend of significant price increases driven by liquidity in the first quarter, and will enter a significant supply-demand gap pattern in the second quarter. The average aluminum price in the first and second quarters of 2026 is expected to be 23,500 / 24,000 yuan/ton. The escalation of the situation in the Middle East may continue to raise concerns about aluminum supply in the industry, leading to aluminum prices rising beyond previous expectations. Coupled with the historically high copper-aluminum ratio and valuation differences in the sector, we remain optimistic about the prospects for aluminum prices and the uplift in sector valuations.

**Risk factors:**

Risks of escalating global trade disputes, risks of overseas electrolytic aluminum capacity coming online exceeding expectations, risks of downstream demand for electrolytic aluminum growing less than expected, risks of significant increases in global energy costs, risks of disturbances in raw material supply at the mining end, and risks of domestic aluminum companies' dividend ratios increasing less than expected

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