BAHRAIN – APRIL 17: Aluminum ingots seen at Aluminum Bahrain BSC factory in Bahrain on Tuesday, April 18, 2006 (Photo by Phil Weymouth/Bloomberg via Getty Images)
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Aluminum prices fell to their lowest since 2022 after Iran attacked two Middle Eastern producers over the weekend, raising concerns about a supply crisis for the industry.
Futures prices on the London Metal Exchange initially rose 5.5% on Monday, reaching $3,492 per tonne at one point, a price last seen in April 2022.
By Monday afternoon, it had rebounded slightly, rising 3.5% to $3,381 a tonne. Aluminum prices have risen about 10% since the dispute began on February 28, but fell briefly last week along with most other asset classes on concerns about a global recession.
Emirates Global Aluminum (EGA) and aluminum bahrainTwo of the Gulf’s largest manufacturing companies came under attack by Iranian drones and missiles on Saturday.
EGA said in a statement that its Al Taweera smelter suffered “significant” damage in the attack and several people were injured.
“The safety and security of our employees is always our top priority,” said CEO Abdulnasser bin Kalban. “We are extremely disappointed and are investigating the damage to our facility.”
“Shockwave” spreads across global markets
Saturday’s attack only darkened the outlook for the region’s primary products companies, which have faced severe supply disruptions over the past month.
About 9% of the world’s aluminum supplies come from the Gulf, and since Iran effectively closed the Strait of Hormuz, most companies in the region have been unable to export the metal beyond the region. The damaged smelter produced 1.6 million tonnes of castings in 2025, according to a statement from EGA.
“The attack has shocked the global aluminum market and raises the risk of a supply crisis that could reshape the industry,” April Kaye Soriano, aluminum research analyst at S&P Global Energy, told CNBC in an email.
He added that if the damage proves to be long-lasting, the market could move away from temporary weakness and begin to reflect tight supply and expectations for higher prices.
Joyce Lee, a commodity strategist at Macquarie Group, told CNBC in an email that the baseline scenario before the attack assumed a reduction in current operating capacity of about 20%, which equates to a production loss of around 800 to 900 kilotonnes in 2026.
Mr Lee said Macquarie deemed the disruption to be enough to push global markets into the red for the year, adding it was closely monitoring the “fluid” situation for any changes.
China’s role
Aluminum is an essential material in electronics, transportation and construction, as well as other industries such as solar panels and packaging.
China is the world’s largest producer of aluminum and tends to limit production to 45.5 million tonnes a year to reduce emissions and prevent overcapacity. Some analysts believe the country has a role to play in enabling supply to a broader market.
“If the Chinese government decides that prices are too high, they could restart many of the country’s idle smelters and fill the world with aluminum,” Artem Volinets, CEO of mining company ACG Metals, told CNBC Europe’s first edition on March 18.
Meanwhile, S&P Global’s Soriano believes China’s ability to expand supply is “limited.”
“Although there is some capacity to increase production, global markets are still exposed to further shocks, especially if the conflict spreads to other metals supply chains,” he added.
