Global Aluminum Earthquake! World's Largest Single Aluminum Smelter Cuts Production, Indian Aluminum Giant Declares Force Majeure

Under the ongoing fires in the Middle East, the global aluminum market is experiencing a “big shakeup”…

Bahrain Aluminum, which operates the world’s largest single aluminum smelter, announced over the weekend that it has begun phased shutdowns. The company stated that, as maritime transport through the Strait of Hormuz is affected, this shutdown will allow it to conserve raw material inventories and maintain operations in other parts of the plant.

It is reported that Bahrain Aluminum has initiated shutdown procedures for three production lines—these lines account for 19% of its annual capacity (1.6 million tons), roughly 2.2% of global aluminum production.

Bahrain Aluminum’s production cut is the latest event amid the turmoil sweeping the global aluminum industry. Currently, manufacturers worldwide are facing soaring aluminum prices, and traders anticipate broader supply disruptions. The London Metal Exchange aluminum price has recently surged to its highest level since 2022.

Due to shipping disruptions in the Strait of Hormuz, Bahrain Aluminum, a state-owned enterprise, along with other Middle Eastern aluminum smelters, has been facing interruptions in metal export transportation and alumina raw material imports.

Earlier this month, Bahrain Aluminum announced a suspension of sales to customers, and Qatar has recently had to halt some aluminum production due to natural gas shortages.

The well-known financial blog ZeroHedge pointed out that, according to the International Aluminum Association, by 2025, the Gulf Cooperation Council (GCC) countries will produce about 6.16 million tons of aluminum, accounting for approximately 8.35% of global supply. The production cuts by Bahrain Aluminum, combined with potential broader chaos in the Gulf aluminum market, could further push up aluminum prices in the London market.

Indian Aluminum Giant Declares Force Majeure

In addition to the direct impact of the conflict on Middle Eastern aluminum companies, aluminum plants in other regions are also currently facing operational challenges due to rising energy costs.

Sources reveal that, due to natural gas supply disruptions in the Middle East leading to shortages, Hindalco Industries has halted production of high-value-added aluminum products—extruded aluminum.

The announcement states that this metal producer under the Aditya Birla Group informed all its extruded aluminum customers of a force majeure event on March 11.

However, Hindalco Industries denied that its extrusion aluminum operations had completely stopped in a statement. The company also said that after some natural gas suppliers declared force majeure, it issued a notice to extrusion aluminum customers, describing it as a “routine business notice regarding potential supply disruptions in the extrusion sector.”

The company added that extrusion aluminum accounts for only a small part of its capacity, and the potential impact currently affects less than 0.1% of its overall operations. “Supported by backup power and alternative energy arrangements, all other downstream and upstream businesses, including electrolytic aluminum, continue to operate normally,” it stated.

Extruded aluminum is widely used in construction, electric vehicles, electronics, and solar panels.

Currently, due to the war between the US, Israel, and Iran, India is embroiled in its most severe natural gas crisis in decades, with the government cutting industrial supplies to protect households from cooking gas shortages. Hindalco stated in its announcement, “The company has taken and will continue to take all reasonable measures to mitigate the impacts of force majeure events.”

Aluminum, the second most widely used industrial metal after steel, has historically been affected cyclically by supply shocks.

This undoubtedly exposes the fragility of the complex aluminum supply network composed of bauxite mines, alumina refineries, and smelters, which often exist in highly specialized forms that are difficult to replace easily.

(Source: Caixin)