US-Iran Joint Military Escalation May Pose Multiple Shocks to Global Primary Aluminum Supply Chain [SMM Analysis]

On February 28, 2026, Israel and the United States jointly launched large-scale military strikes against Iranian territory. The sharp deterioration of the geopolitical situation in the Middle East quickly spread to the global commodity market, exerting multi-dimensional impacts on the global primary aluminum (electrolytic aluminum) industry, mainly reflected in supply chain disruptions and rising production costs.

In terms of electrolytic aluminum supply, the conflict is expected to present a dual impact of "direct shocks plus indirect spillovers": it will not only threaten domestic production capacity in Iran, but also disrupt shipping through the Strait of Hormuz, affecting the entire aluminum industry in the Middle East and further disturbing the global supply balance.

I. Risk of Shutdown or Sharp Production Cut in Iran’s Domestic Electrolytic Aluminum Capacity

As a major electrolytic aluminum producer in the Middle East, Iran had an installed capacity of 660,000 tonnes and an actual output of 620,000 tonnes in 2025, accounting for approximately 0.8% of the global total. The recent military strikes targeted core infrastructure; damage to power facilities and industrial zones will lead to full or substantial production halts at local enterprises, potentially reducing global primary aluminum supply by nearly 600,000 tonnes per year. Coupled with sanctions, resuming production will be extremely difficult.

More importantly, Iran’s electrolytic aluminum industry is highly dependent on imported alumina. In 2025, its alumina demand reached about 1.24 million tonnes, while domestic output was only 250,000 tonnes (meeting 20% of demand), leaving 80% to be imported, mainly from India. If the war disrupts ports and logistics, imported alumina will be blocked. Domestic supply can only support 125,000 tonnes of electrolytic aluminum production, meaning around 80% of capacity will halt due to feedstock shortages, further amplifying supply shocks.

II. Shipping Risks in the Strait of Hormuz Spill Over to Aluminum Industries in Neighboring Countries

The Strait of Hormuz is the only strategic passage connecting the Persian Gulf to the Indian Ocean, handling most seaborne trade of Middle Eastern primary aluminum and related raw materials. Its shipping security directly determines the operation of the regional aluminum industry; any blockage will trigger a regional supply crisis and transmit it globally.

The Middle East is a core global hub for primary aluminum production and trade. In 2025, the region’s total electrolytic aluminum capacity reached 6.92 million tonnes, with actual output of about 6.85 million tonnes, accounting for 9% of global primary aluminum supply, and is one of the world’s key low-cost electrolytic aluminum production bases. According to GTT data, after excluding intra-Middle East trade, the region’s primary aluminum exports totaled around 464,000 tonnes in 2025. A closure of the Strait of Hormuz would disrupt these exports, tightening global spot supply and stoking supply concerns.

For upstream raw material supply chains, the Middle East is a net alumina importer with insufficient self-sufficiency. SMM data show that Turkey, Iran, Saudi Arabia, and the UAE had a combined alumina capacity of 5.15 million tonnes and actual output of about 4.8 million tonnes in 2025. The region’s total alumina demand for electrolytic aluminum production reached approximately 13.75 million tonnes. If the strait is blocked, domestic alumina can only support around 2.49 million tonnes of electrolytic aluminum output (36% of 2025 production), leaving a supply gap of 4.36 million tonnes (32% of total demand). This would put roughly 64% of the Middle East’s electrolytic aluminum capacity at risk of production cuts or shutdowns due to alumina shortages.

Notably, alumina production in countries such as the UAE relies on imported bauxite. A strait closure would cut off feedstock for regional alumina refining, further undermining electrolytic aluminum output. Besides core raw materials, cross-border trade in auxiliary materials for aluminum smelting will also be severely disrupted, causing delivery delays and surging costs, and constraining production.

Meanwhile, shipping risks will directly push up freight rates and war risk insurance premiums. If vessels are forced to reroute via the Cape of Good Hope, voyage time will increase by 10–15 days, driving up logistics costs. Combined with soaring global energy prices triggered by the conflict, power costs for Middle Eastern smelters will rise sharply, squeezing profit margins. Some producers may cut operating rates, hold back inventory, or reduce exports, further tightening effective global primary aluminum supply.

Risk Warning

The Middle East turmoil triggered by the US-Iran conflict has become the major geopolitical black swan for the global primary aluminum market, potentially causing millions of tonnes of supply disruptions and raising smelting costs. Coupled with risk aversion, aluminum price volatility may intensify.Continuous attention is required to risks including conflict escalation, strait blockades, and raw material shortages, as well as further macro shocks on aluminum prices. Businesses and investors should prudently manage operational and investment risks arising from supply chain fluctuations.