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.

From the perspective of the overall production capacity and trade pattern of electrolytic aluminum in the Middle East, this region is a global core area for primary aluminum production and trade. According to statistics, the total capacity of electrolytic aluminum in the Middle East reached 6.92 million tons in 2025, with an actual output of approximately 6.85 million tons, accounting for 9% of the world's total primary aluminum supply. It is one of the core production areas of low-cost electrolytic aluminum globally. If the Strait of Hormuz is blocked, it will prevent the normal loading and export of electrolytic aluminum ingots, leading to a contraction in global primary aluminum spot supply and potentially triggering concerns about global supply.

From the perspective of the upstream raw material supply chain, the Middle East is a net importer of alumina with insufficient self-sufficiency in raw materials. The shipping safety of the Strait of Hormuz directly determines the normal operation of its electrolytic aluminum production capacity. According to SMM data, the total alumina production capacity of Turkey, Iran, Saudi Arabia, and the United Arab Emirates (UAE) is approximately 5.15 million tons, with an actual output of about 4.8 million tons in 2025. The total annual demand for alumina for electrolytic aluminum production in the Middle East is about 13.75 million tons. If the Strait of Hormuz is blocked, the 4.8 million tons of alumina produced domestically in the Middle East can only support the production of about 2.49 million tons of electrolytic aluminum, accounting for approximately 36% of the total electrolytic aluminum output in the Middle East in 2025. The remaining alumina demand gap of about 8.39 million tons cannot be met through imports, accounting for 64% of the total demand. This means that approximately 64% of the electrolytic aluminum production capacity in the Middle East will face the risk of production reduction or suspension due to alumina supply disruption.

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.