Goldman Sachs stated that its latest perspective indicates that the Persian Gulf region, as a significant global growth engine for aluminum supply, is facing a significant clouding of its future expansion prospects due to regional conflicts.
This region currently accounts for approximately one fifth of the global aluminum production outside China. Originally, relying on the advantage of cheap energy, it was widely regarded as an important source to meet the future growth in global aluminum demand. However, with the escalation of the war in Iran, frequent disruptions in supply chains and production losses have brought significant uncertainty to this expansion logic.
The conflict directly impacted key production facilities. The large smelter of the regional leading enterprise, Emirates Global Aluminium (EGA), located in Al Taweelah, was forced to enter a "uncontrolled shutdown" state due to power outages caused by missile and drone attacks. The liquid aluminium in the electrolysis cells froze and solidified during operation, causing severe damage to the equipment. Such "electrolysis cell freezing" accidents usually take 6 to 8 months to resume production, and may even lead to the permanent withdrawal of some production capacity. At the same time, the actual risk of the Strait of Hormuz being blocked has further intensified. The transportation of raw materials is hindered, and the depletion of inventory will force more smelters to reduce production or shut down.
As a result of this, the price of aluminium in London has risen to its highest closing level in four years, returning to the high range seen at the beginning of the俄乌 conflict. The market is now re-evaluating the long-term impact of geopolitical risks on supply.
Goldman Sachs believes that although the Persian Gulf has an energy cost advantage, companies will be more cautious about making new investments in the current security environment, and expansion plans may be postponed or even cancelled.
Overall, the conflicts in the Middle East not only directly impacted short-term supply, but also undermined the key pillars of the global aluminum industry's future supply structure. In the context of sustained growth in demand, if production expansion in this region is hindered, the global aluminum market may face a long-term imbalance between supply and demand, thereby pushing the price center upward. For downstream manufacturing industries, this means that cost pressures will be more persistent, while for investors, the long-term upward risk of aluminum prices is significantly accumulating.
