On February 28, 2026, Israel and the US jointly launched large-scale military strikes on Iran’s mainland. Geopolitical tensions in the Middle East deteriorated sharply and quickly transmitted to global commodity markets, creating multidimensional impacts on the global primary aluminum (aluminum) industry, mainly reflected in two areas: supply chain disruptions and rising production costs.
Supply side, the conflict’s impact on aluminum supply may present a dual pattern of “direct shock + indirect spillover”: it not only threatens Iran’s domestic capacity, but also affects the entire Middle East aluminum industry by disrupting shipping through the Strait of Hormuz, thereby influencing the global supply balance.
I. Iran’s Domestic Aluminum Capacity Faces Risks of Shutdowns or Significant Production Cuts
- As a key aluminum producer in the Middle East, Iran had existing capacity of 660,000 mt and actual production of 620,000 mt in 2025, accounting for about 0.8% of the global total. This military strike directly targeted core infrastructure; damage to power systems and industrial facilities may force enterprises into full shutdowns or significant production cuts, potentially reducing global primary aluminum supply by nearly 600,000 mt per year. Coupled with factors such as sanctions, resuming production will be extremely difficult.
- More critically, Iran’s aluminum industry is highly dependent on imported alumina. In 2025, its alumina demand was about 1.24 million mt, while domestic production was only 250,000 mt (meeting 20% of demand), with 80% relying on imports (mainly from India). If the war disrupts ports and logistics and overseas alumina cannot enter the country, domestic capacity alone will support only 125,000 mt of aluminum production, meaning about 80% of capacity will be forced to idle due to raw material supply disruptions, further amplifying the supply shock.
II. Strait of Hormuz Shipping Risks Spill Over to the Aluminum Industries of Multiple Neighboring Countries
The Strait of Hormuz is the only chokepoint from the Persian Gulf to the Indian Ocean and carries the main seaborne transport of Middle Eastern primary aluminum and related raw materials. Its shipping security directly determines the operation of the regional aluminum industry; once disrupted, it will trigger a regional supply crisis and transmit it globally.
- From the perspective of the Middle East’s overall aluminum capacity and trade structure, the region is a core global hub for primary aluminum production and trade. According to statistics, total aluminum capacity in the Middle East reached 6.92 million mt in 2025, with actual production of about 6.85 million mt, accounting for 9% of global aluminum ingot supply, and it is one of the core low-cost aluminum producing regions globally. If the Strait of Hormuz is blockaded, aluminum ingot exports will be unable to be loaded and shipped normally, global spot primary aluminum supply will tighten, and this may trigger concerns over global supply.
- Upstream raw material supply chain, the Middle East is a net importer of alumina with insufficient raw material self-sufficiency; the shipping security of the Strait of Hormuz directly determines the normal operation of its aluminum capacity. SMM data showed that the combined alumina capacity of Turkey, Iran, Saudi Arabia, and the UAE was about 5.15 million mt, with actual production in 2025 at about 4.8 million mt; total annual alumina demand for aluminum production in the Middle East was about 13.75 million mt. If the Strait of Hormuz were blocked, the 4.8 million mt of alumina produced within the Middle East would only support about 2.49 million mt of aluminum production, accounting for about 36% of the Middle East’s total aluminum production in 2025. The remaining alumina demand gap of about 8.39 million mt could not be filled through imports. This gap would account for 64% of total demand, meaning that about 64% of aluminum capacity in the Middle East would face the risk of production cuts or shutdowns due to disruptions in alumina supply.
- Notably, taking the UAE as an example, bauxite used in the UAE’s alumina production relies on imports. A strait closure would leave alumina in the region without raw material for smelting, further affecting aluminum production within the Middle East. In addition to core raw materials, cross-border trade of other auxiliary materials required for aluminum production would also be severely impacted. Disruptions to shipping through the Strait of Hormuz would lead to transportation delays for auxiliary materials and surging costs. If auxiliary material supply cannot keep up in time, it would further constrain the production pace of aluminum enterprises across Middle Eastern countries, intensifying pressure from supply contraction. Meanwhile, shipping risks would also directly push up ocean freight rates and war insurance premium rates. Estimates suggest that if vessels are forced to detour around the Cape of Good Hope, the voyage would be extended by 10-15 days, and freight rates and war insurance premium rates would also rise. Coupled with a surge in global energy prices triggered by the conflict, power costs for Middle Eastern aluminum enterprises would climb sharply, further squeezing production profits. Some enterprises may choose to proactively reduce operating rates, hold back sales, or cut exports, further tightening effective global supply of primary aluminum.
Risk Alert
Middle East turmoil triggered by the US-Iran conflict has become the largest geopolitical black swan in the global primary aluminum market, potentially causing supply disruptions on the scale of several million mt while also pushing up smelting cost. Coupled with risk-off market sentiment, aluminum price volatility may be amplified. Going forward, it is necessary to remain vigilant against risks such as escalation of the conflict, strait blockades, and disruptions in raw material supply, as well as further impacts on aluminum prices from macro disturbances, and to respond prudently to operational and investment risks arising from supply chain fluctuations.
Data Source: SMM Click the SMM Industry Database to learn more
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