Global attention has largely focused on the surge in oil and gas prices following the US-Israeli war against Iran. But another commodity is quietly becoming one of the biggest casualties of the conflict — aluminium. Prices of the metal have surged to four-year highs as the effective shutdown of the Strait of Hormuz disrupts trade flows from the Gulf, a region that has become a critical supplier to Western markets.
Benchmark aluminium on the London Metal Exchange briefly touched $3,544 a metric ton on Monday, the highest level since March 2022, before easing slightly to around $3,394 a ton, according to Reuters. The rally reflects mounting concerns that prolonged shipping disruptions could choke off supply in a market that was already tightening before the conflict began.
The crisis highlights how geopolitical shocks in the Middle East can reverberate far beyond energy markets, rippling through global industrial supply chains that rely heavily on Gulf aluminium exports.
Aluminium faces squeeze
The Strait of Hormuz is one of the world’s most critical maritime passages. While it is widely known as a conduit for oil and liquefied natural gas, it also plays a crucial role in the global aluminium trade. According to the International Aluminium Institute, the Gulf region accounted for more than 8 percent of global aluminium output last year. Over 5 million metric tons of metal produced in Bahrain, Qatar, Saudi Arabia and the United Arab Emirates are shipped annually through the strait to customers in Europe and the United States.
The escalating war has now effectively shut that corridor. Reuters reported that the conflict has virtually shut the Strait of Hormuz for aluminium shipments, cutting off exports of the metal while also blocking imports of key raw materials needed to sustain production. The disruption is particularly severe because Gulf smelters depend heavily on imported bauxite and alumina, the raw materials used to produce aluminium.
Ships carrying these materials have already begun diverting from their original routes. Vessel-tracking data cited by Reuters shows multiple bulk carriers that were heading toward the United Arab Emirates changing course toward Asia after the strait became impassable.
The aluminium supply chain operates in tightly linked stages. Bauxite ore is refined into alumina, which is then smelted into aluminium used in industries ranging from transport and construction to packaging. The current shipping disruption threatens all three stages simultaneously.
Reuters reported that three large vessels carrying bauxite, with a combined cargo of about 371,000 metric tons, have diverted away from the Gulf after approaching the region. Another vessel transporting Australian bauxite that was originally headed to the Gulf is now bound for China instead. Two ships carrying alumina destined for Bahrain also appear to be changing course.
The disruption means that Gulf smelters cannot easily export finished aluminium while also struggling to import the raw materials needed to maintain production. ING analysts warned that this dual squeeze could quickly translate into supply losses if the conflict persists.
“Extended disruption in the Strait would simultaneously choke alumina inflows and aluminium exports for Middle Eastern smelters,” ING said in a note on March 6, adding that such a scenario would “tighten global supply meaningfully.”
On Tuesday, Qatari smelter Qatalum began to shut down. Shareholder Norsk Hydro issued a force majeure to customers. “The decision to shut down was made after the company’s gas supplier informed it of a forthcoming suspension of its gas supply,” Hydro, which holds 50% of the Qatalum joint venture, said in a statement. QatarEnergy, which owns 51% in the other Qatalum shareholder, Qatar Aluminum Manufacturing Co, had earlier said it was halting production of some downstream products, including aluminium, a day after suspending liquefied natural gas production due to Iranian drone attacks. Hydro said the shutdown of the 648,000 metric ton per year smelter was expected to be completed by the end of March and that a full restart could take six-to-12 months.