Two major aluminum plants in the Middle East are attacked; approximately 10% of global supply could be impacted?

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By Yiqing Daily Reporter Peng Fei 丨 Edited by Huang Sheng

Amid ongoing instability in the Middle East, in addition to pressure on oil trading, global aluminum supply chains have also begun to be affected.

According to a March 29 report by Xinhua News Agency, two major aluminum plants in the Gulf countries of Bahrain and the United Arab Emirates were recently confirmed by authorities in those countries to have been attacked by Iran. The attacks resulted in injuries and property damage. Aluminum products exported from the Middle East account for about one-tenth of global supply and may create some impact on the market.

On the morning of March 30, a domestic figure in the aluminum industry told reporters from Yicai Daily that the attack on the aluminum plant triggered market fears that the supply chain might break. As a result, London Metal Exchange (LME) aluminum futures prices and individual stock prices in the A-share aluminum sector all rose to varying degrees that day.

On one side is the pressure of a potentially broken overseas supply chain and a sharp spike in the per-ton cost of aluminum; on the other is domestic aluminum companies capturing export-win “bonus orders” by leveraging the decline in the LME/Shanghai ratio. In this aluminum market shock triggered by the U.S.-Israel-Iran conflict, the global map of the aluminum industry is undergoing profound reshaping and reordering.

Supply chain fragility becomes evident

The worsening of the Middle East situation is sending strong danger signals to the global aluminum supply chain.

On March 29, Iran’s Islamic Revolutionary Guard Corps issued a statement confirming that it used missiles and drones to strike two aluminum plants in the UAE and Bahrain associated with U.S. military and aerospace and aviation industries, as retaliation for the U.S. and Israel’s earlier attacks on Iran’s civilian facilities such as steel plants.

The direct victims of Iran’s strikes were the Emirates Global Aluminum Company (EGA), one of the world’s largest aluminum producers, and Bahrain Aluminum Company (Alba). It is reported that EGA has two plants in the Middle East, producing about 1.6 million tons of primary aluminum in 2025, accounting for more than 2% of global share.

EGA confirmed that a plant located in the industrial zone of Abu Dhabi suffered major losses in the attack on March 28, and that several workers of Indian and Pakistani nationality were injured. On March 29, Bahrain Aluminum Company said that its plant under the company was hit on March 28, causing two minor injuries; the company is currently assessing property losses.

In fact, the crisis in the Middle East aluminum market was not sudden; the fragility of the supply chain had long been apparent.

Even before the current strikes, transportation of aluminum products and raw materials in the Middle East had already been heavily affected due to disruptions in shipping through the Strait of Hormuz. Citic Securities said that on March 12, Qatar’s Qatalum aluminum plant (nominal annual primary aluminum capacity of 636,000 tons) announced the shutdown of 40% of its capacity due to a natural gas supply cut; on March 15, Alba (annual capacity of about 1.6 million tons) announced it encountered “force majeure” due to the Strait of Hormuz shipping route being blocked, and reduced production by about 20%. The combined capacity impact of these two projects accounts for 0.7% of global capacity.

“Up to now, neither of the two companies has officially announced that their capacity operations have suffered a substantive interruption.” Zhang Meng, an analyst at Aize Consulting, told Yicai Daily reporters that EGA has two plants in the Middle East, producing about 1.6 million tons of primary aluminum in 2025. If all were to stop, the impact would be substantial. 1.6 million tons of primary aluminum basically accounts for more than 2% of global share.

Based on the global capacity distribution, the electrolytic aluminum capacity in the entire Middle East region accounts for nearly 9% of the world, and the export volume accounts for about one-tenth of global supply. Guoxin Futures analysis believes that although the two attacked companies have not officially announced a substantive interruption to capacity operations, under extreme scenarios, the Middle East region may see a production interruption in electrolytic aluminum capacity of 2.8 million tons, accounting for about 3.5% of global aluminum capacity.

Citic Securities also commented that the direct attack on aluminum plants further significantly raises the risk of production disruption in the Middle East region. Equipment damage will lead to capacity reductions and shutdowns over a longer cycle, producing deeper effects on supply and demand.

In Zhang Meng’s view, the market is currently mainly focused on whether the relevant companies have been damaged and shut down; the subsequent price trend will depend on the final assessment results of capacity damage released by the relevant aluminum enterprises, as well as how the evolution of the geopolitical situation affects market risk appetite and expectations for macro liquidity.

Institutions expect aluminum prices to rise in the short term

The escalation of geopolitical conflict has fueled fears that the supply chain could break, and also ignited bullish sentiment in the capital markets.

Yicai Daily reporters noticed that LME aluminum futures have performed strongly within March. The peak climbed to 3,546.5 USD/ton, setting a new high in nearly four years. On March 30, LME aluminum futures sharply surged. The open price was 3,400 USD/ton; during trading it briefly reached a high of 3,492 USD/ton, and the low fell to 3,400 USD/ton. By comparison, although the SHFE aluminum quote also moved up in sync and at one point came close to the high of 26,000 yuan/ton, its overall rise was weaker than LME aluminum. On the morning of March 30, the main contract of SHFE aluminum futures rose more than 3% intraday; the SHFE 26,05 call option 27,000 contract surged 160.00%.

Although domestic futures prices rose relatively moderately, the aluminum sector in the A-share market saw a surge to the daily trading limit. By the close of March 30, stocks including Tianshan Aluminum (SZ002532), Minfa Aluminum (SZ002578), Changlu Co., Ltd. (SZ002160), and Yiqiu Resources (SH601388) hit the daily limit. Huaxi Securities cautioned that if dense production reduction and shutdown announcements land later, the further downside space for aluminum prices is extremely limited, and it has value for left-side attention.

Behind the rally in futures prices is the rapid increase in the global per-ton electricity cost of aluminum production. Postal Securities said that since the outbreak of the Middle East conflict, natural gas prices have skyrocketed, and power-generation-based regions that rely on natural gas have seen per-ton electrolytic aluminum electricity power costs significantly higher than in the prior period. It is expected that even if the Middle East situation eases later, as long as the risk premium for the Strait of Hormuz remains high, the marginal advantage of extremely low-cost capacities in the Middle East may weaken over a long period.

Postal Securities further predicts that if the conflict continues, with natural gas power-generation costs rising and combined with raw material shortages, aluminum prices may be expected to rise to 30,000 yuan/ton.

Notably, in this global capacity crisis, China’s aluminum processing companies have nonetheless received tangible “export bonus dividends.” Because the recent rise in SHFE aluminum has been significantly weaker than LME aluminum, as of March 26, the average LME/SHFE ratio for March was 7.36, down clearly from 7.86 in the same period last year, which greatly enhances the export price advantage of domestic rolled products and foil.

Aize Consulting’s survey shows that for leading rolled-foil companies in Henan, current production load has been maintained at full operation; in the recent period, export orders increased by 15% month-over-month. A large company in Shandong also keeps production lines running at full capacity due to the widening price gap between domestic and overseas markets and overseas orders flowing out; and such export bonus dividends are expected to continue until June 2026.

Meanwhile, the impressive performance of domestic listed aluminum companies has also injected strong confidence into the market. Taking Tianshan Aluminum as an example, its released 2025 annual performance report shows that in 2025 it achieved operating revenue of 29.502 billion yuan, net profit of 4.818 billion yuan, and plans to distribute cash dividends of 1.147 billion yuan. Even more encouraging is that the company expects net profit of 2.2 billion yuan in the first quarter of 2026, up by over 100% year over year, breaking the historical high for single-quarter performance again.

Looking ahead to the next stage, the resilience of the industry on the demand side is also not to be underestimated. Citic Securities expects that in 2026, the power grid and automotive sectors will maintain a high level of activity, thereby supporting the momentum for growth in electrolytic aluminum demand. It expects aluminum prices in 2026 to reach 23,000 yuan/ton.

Guoxin Futures emphasizes that the further recovery of the automobile consumption market and how it boosts downstream demand still needs to be closely monitored. Huaxi Securities believes that electrolytic aluminum is a rigid-demand industrial commodity; in the historical downcycle, the decline in consumption has been only 1% to 2%, which is far smaller than the supply-side contraction. If dense production reduction and shutdown announcements are implemented later, the further downside space for aluminum prices is extremely limited.

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责任编辑：赵思远