How is Instability in the Middle East Impacting Aluminium?
Supply chains around the world have been disrupted in varying degrees by the ongoing volatility in the Middle East.
According to Wood Mackenzie, the conflict is triggering a critical supply chain crisis for aluminium, which could remove 3.5 million tonnes of output in 2026.
With disruptions to securing raw materials and delays in shipping, the market is facing lasting instability.
An industry chokepoint
With ongoing conflict in the Middle East, challenges are arising for regional producers of aluminium to secure enough alumina and other raw materials to continue production. Even with lower utilisation rates, there is a difficulty in securing enough. At the same time, exports are facing disruption due to ongoing shipping risks through core routes.
Wood Mackenzie demonstrates concerns for the short- and long-term outlook for global aluminium, with a need for enhanced visibility.
6.8 Mt of aluminium production – which makes up 18% of global exports excluding China – is at significant disruption. The majority of Middle Eastern smelters are concentrated along the Strait of Hormuz, with approximately 80% of production in this region being for export markets. Disruption in the area, therefore, has a global impact.
“The Strait of Hormuz is effectively a chokepoint for the global aluminium market. Disruptions here could cut off up to 60% of alumina supply to Middle Eastern smelters, rapidly deepening the market deficit,” said Charvi Trivedi, Principal Analyst at Wood Mackenzie.
“The longer the conflict persists, the more difficult it becomes for producers to sustain operations, with risks increasingly skewed toward further supply losses and higher prices.”
Further disruption
These risks have been intensified by direct attacks on smelters in the United Arab Emirates and Bahrain. Following strikes on EGA's (UAE) Al Taweelah smelter and Alba (Bahrain), Wood Mackenzie predicts a market deficit of 4 Mt in 2026 and a reduction of global output by 3%.
EGA's facility had to halt operations after attacks caused damage to its power plant. At Alba, 19% of capacity has been shut down due to critical alumina shortages. Following attacks, it is expected to operate at a utilisation of 30%, following significant damages on the facility. Qatalum in Qatar is operating at 60% of capacity, whereas Ma'aden (Saudi Arabia) is supplying alumina to neighbouring smelters at an emergency rate.
Despite high costs, producers are working on contingency options which include 1,400 km overland trucking routes.
The majority of Middle Eastern aluminium production is exported to key markets which include South Korea, Turkey, Japan and Mexico. As a result, disruption to production, as well as delayed logistics from production to market, poses major risks to manufacturing supply chains.
“What this disruption highlights are how concentrated and fragile aluminium supply chains have become,” says Uday Patel, Principal Analyst at Wood Mackenzie.
“With so much production and export infrastructure tied to a single trade route, even short-term disruptions can have outsized and immediate global consequences.”
This raises the risk of downstream disruption, with sectors such as automotive and construction exposed to supply chain concerns. Reduced availability of aluminium then results in tighter input markets and increased costs.
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The future of supply chains
Due to a high chance of rising prices, Wood Mackenzie predicts aluminium prices will sit somewhere between US$3,700-3,800tn in the upcoming period.
To avoid disruption and high prices, Wood Mackenzie suggests a bridging of the gap in the form of near-term substitution and thrifting. A move towards the use of scrap, copper and PET could help as a temporary fix, particularly in the packaging industry. However, this a short-term fix for what is an anticipated to be a long-term issue.
Supply from other regions is also limited, as China has a 45Mt production cap, while supply from Russia, India and Indonesia cannot meet demands or offset losses.
The conflict has shaken every step of aluminium supply chains, from production, to smelting and to distribution. The effects of this, according to Wood Mackenzie, are likely to be felt for years to come, even if short-term solutions can be found.