Iran conflict impacts the global aluminum supply chain; the region's leading aluminum producer shuts down smelters after the Iran attack.

Against the backdrop of the Middle East situation continuing to escalate, Iran’s strikes on key industrial facilities in the Gulf region have begun to hit global commodities markets.

According to a report on Wednesday, April 1, after its plant area was hit by Iranian missiles and drones over the weekend, the Middle East’s largest aluminum metal producer—Emirates Global Aluminium (EGA)—has been forced to suspend operations at its main smelter in Abu Dhabi.

After the news broke, LME (London Metal Exchange) benchmark aluminum futures surged by as much as about 2% intraday at one point. Prices of other industrial metals such as copper also moved higher in tandem, indicating that the market is starting to price in broader supply risks. Alcoa (AA) shares quickly expanded their gains in early U.S. trading and had risen by more than 7% by the afternoon. Another U.S. aluminum firm, Century Aluminum (CENX), had also risen by more than 7% at one point during the afternoon session.

Market participants believe this round of disruption has spilled over from the energy sector into the supply chain for industrial metals. Combined with transport disruptions through the Strait of Hormuz, it is raising dual concerns about “a supply shock + a resurgence in inflation,” becoming one of the key drivers behind recent volatility in global financial markets.

Iran’s attacks on industrial facilities in the Middle East have expanded the market shock from oil to industrial metals, with aluminum becoming the first “flashpoint.” Against a backdrop in which supply-chain vulnerabilities are being amplified, interlinked risks between mining, energy, and manufacturing are rising, and global markets are facing yet another supply-side shock driven by geopolitical conflict.

EGA smelter attacked and forced to shut down, Middle East aluminum supply abruptly tightens

According to a report on Wednesday, sources familiar with the matter said that EGA’s Al Taweelah smelter in Abu Dhabi experienced a power outage after being hit by Iranian missiles and drones. It was forced to urgently shut down, and some potlines showed “out-of-control shutdown,” causing metal to solidify inside the equipment and leading to serious damage.

Meanwhile, regional large smelters such as Bahrain Aluminium (Alba) have also confirmed that they were attacked or forced to cut production. Both of the above-mentioned plants are major global supply sources, and their annual output in 2025 is about 1.6 million tons each.

Analysts noted that if this is compounded by Qatar’s joint-venture aluminum smelter Qatalum having previously reduced output, then about 3.0 million tons of annualized capacity in the Middle East could be affected—equivalent to nearly half of the region’s aluminum production—marking a “significant upgrade” in the supply shock.

Strait of Hormuz “chokepoint” energy shock spills over: Inflation transmission from oil to metals

Compared with a single plant shutting down, the bigger risk lies in systemic disruption to the supply chain.

Aluminum smelters in the Middle East rely heavily on imported alumina, and the Strait of Hormuz is a key transportation channel. Research institutions said that once the strait remains restricted for an extended period, it could cut off up to about 60% of the region’s alumina supply, further forcing smelters to reduce output and even shut down.

This chain of effects means the shock is not confined to the smelting stage; it will also spread upstream to mining (bauxite, alumina) and downstream to manufacturing (automobiles, aviation, construction), forming a typical multi-layer “resources—smelting—manufacturing” shock.

Notably, this round of disruption is not occurring in isolation, but is the result of linkages between the energy and metals markets.

Previously, the market was already worried about interruptions to crude oil transport due to tensions in the Strait of Hormuz. Meanwhile, the aluminum industry itself is a typical energy-intensive sector, and rising electricity and natural gas prices will further lift production costs.

Therefore, the current disruption has three transmission paths:

• Higher energy prices → higher smelting costs
• Transport disruptions → shortages of raw-material supply
• Facility damage → direct loss of production capacity

With all three combining, it significantly reinforces the risk of globally “cost-push inflation.”

Market outlook: Supply gap may persist

Analysts expect that if the conflict continues and the Strait of Hormuz still cannot restore navigation for a long time, the global aluminum market in 2026 may see a clear supply-demand gap.

On one hand, the Middle East accounts for about 9% of global aluminum supply, serving as an important source for manufacturing industries in Europe, Asia, and the United States; on the other hand, in the short term, other regions will be difficult to quickly fill the gap.

More importantly, geopolitical uncertainty is rising. The U.S. has already stated that it will make restoring navigation through the Strait of Hormuz one of the important conditions for adjusting military actions. This means the duration of the conflict remains highly uncertain.

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