Aluminium prices on the London Metal Exchange surged by 6% on Monday, approaching four-year highs. This sharp rise was directly triggered by Iranian missile and drone attacks over the weekend, which damaged the facilities of the Middle East’s two largest aluminium producers. The attacks disrupted operations at these key smelters, immediately reducing their output and tightening global supply.
Benchmark LME three-month aluminium prices climbed to $3,492 per metric ton, marking the highest level since March 19. This increase reflects the market’s reaction to the operational disruptions at Emirates Global Aluminium (EGA) and Aluminium Bahrain (Alba), which are currently assessing the extent of damage to their facilities. Both companies play crucial roles in the aluminium supply chain, and any interruption in their production has an immediate impact on price.
If aluminium prices break above $3,546.50, a level last seen on March 12, it would signal the possibility of reaching peaks experienced during the Covid-19 pandemic in 2022, when global supply chains were severely disrupted.
Aluminium Bahrain, which operates one of the world’s largest aluminium smelters, reported on Sunday that it was evaluating the damage caused by the Iranian strikes. The company confirmed that two employees were injured in Saturday’s attack. Similarly, Emirates Global Aluminium, the Middle East’s largest aluminium producer, experienced significant damage to its site from the same incident, further reducing production capacity.
The immediate disruption to these smelters is particularly concerning because Gulf aluminium producers collectively account for about 9% of global supply. Since the US-Israeli conflict with Iran began, most Gulf producers have been unable to ship their products through usual routes due to the closure of the Strait of Hormuz by Iran. This bottleneck in transportation adds to the supply shortage, intensifying upward pressure on aluminium prices.
Emirates Global Aluminium is recognised as the largest aluminium producer in the Middle East, while Aluminium Bahrain operates the world’s largest single-site smelter. Their size and output mean that any operational disruptions have far-reaching effects on worldwide aluminium availability and pricing.
The supply disruptions have also influenced related markets, with shares in Australian-listed alumina producers rallying—Rio Tinto rose over 2 percent and South32 nearly 7 percent—as investors anticipate increased demand for alternative sources.
Looking ahead, if damage to Gulf smelters is not quickly repaired and shipping routes remain blocked, global aluminium supply could face prolonged shortages. This scenario would likely result in continued price volatility, higher costs for manufacturers, and potential disruptions to industries reliant on aluminium. The ripple effects could also impact global trade patterns, as buyers seek new suppliers to compensate for lost output from the Gulf region.