Hormuz Strait "Blockage" Impacts Global Aluminum Market: Bahrain Aluminum Forced to Cut Production by 19% Goldman Sachs Warns Aluminum Price May Break Through $4,000

Tongtong Finance APP learned that due to disruptions in navigation through the Strait of Hormuz, one of the world’s largest single-site smelters—Alba Bahrain—has been forced to implement a production reduction plan in mid-month. As a key supplier in the global aluminum industry, logistics disruptions in the Middle East have evolved into significant production cuts. The company has phased out three of its main production lines, directly impacting about 19% of its annual capacity, aiming to extend the use of existing bauxite and alumina inventories by proactively shrinking capacity to ensure the long-term safe operation of its core facilities.

This supply-side contraction is not an isolated event but a chain reaction affecting the entire regional smelting industry. Qatar’s Qatalum smelter has previously reduced its capacity to about 60% due to upstream natural gas supply disruptions caused by conflicts. Meanwhile, although UAE’s Emirates Global Aluminium (EGA) is currently operating normally, severe delays in shipping finished metals have forced the company to consider using overseas strategic reserves to fulfill delivery contracts.

The Middle East accounts for about 9% of global aluminum production. Alba Bahrain’s production cuts, combined with reductions elsewhere, have heightened market concerns over supply shortages and warned of more severe risks for manufacturers. Specifically, Alba Bahrain had suspended sales to customers earlier this month, while Qatar was forced to halt some aluminum production due to natural gas shortages.

Stimulated by this news, international aluminum prices performed strongly on the London Metal Exchange (LME), soaring to $3,546.50 per ton at one point, hitting the highest level since 2022. With nearly one-fifth of aluminum imports in Europe heavily dependent on Middle Eastern supplies, the substantial reduction in current output and ongoing logistical bottlenecks are intensifying global supply shortage fears.

Analysts from Goldman Sachs and other international financial institutions believe that if the Middle Eastern shipping routes remain closed, leading to depletion of regional inventories, aluminum prices could potentially break through $4,000 per ton, exerting a profound impact on the cost structure of downstream manufacturing worldwide.

During early trading on the London Metal Exchange, aluminum prices rose by 1.6%, reaching $3,494.50 per ton, before narrowing gains. As of press time, trading was at $3,420.00 per ton.