With the U.S. and Israel attacking Iran, the closure of the Strait of Hormuz, the global shipping choke, not only impacts oil and gas shipments, but also poses a serious challenge to Western aluminum supplies.
According to data from the International Aluminum Association, the Gulf region contributed more than 8% of the world's aluminum production last year, and about 5 million tons of metal are exported to the global market through Hormuz every year, with smelters in countries such as Bahrain, Qatar, Saudi Arabia and the United Arab Emirates playing a central role in it. At the same time, large quantities of bauxite and alumina also need to be transported into the region in reverse to provide raw material support for energy-intensive smelters.
Over the past two decades, the Gulf countries have rapidly emerged as one of the most important aluminum production centers outside China, relying on abundant natural gas resources. Excluding Russian production that is difficult to enter the European and American markets due to sanctions, the GCC has actually become the most critical source of primary aluminum in the West. Gulf smelters not only export primary aluminum, but also produce a variety of alloys and semi-finished products, providing diversified products for industrial chains such as automobiles, construction, and packaging. For example, Bahrain has an annual production capacity of 1.5 million tons and exports to more than 70 countries, supplying a large number of alloys and processed materials to the European and American markets.
The current market is already in a fragile state. China's production growth has slowed due to capacity cap restrictions; Europe closed a number of smelters after the Russia-Ukraine conflict, Mozal smelter in Mozambique shut down, and some production capacity in Iceland was limited, making Western markets more dependent on Gulf metals. LME inventories fell sharply last year and have continued to decline this year, and spot market tensions continue to rise. The news of a potential shutdown in Qatar has pushed aluminum futures prices to a near-four-year high.
The deeper risk lies in the secondary shock of energy prices. Smelting is highly dependent on electricity, and if global gas and electricity prices soar again, the remaining production capacity in Europe and the United States may face further squeezes. For Western manufacturers, they have to face both contraction in physical supply and higher energy costs. If Hormuz is blocked for a long time, Gulf production capacity or transportation is blocked, and the global aluminum supply chain will encounter a systematic test.
