The Middle East's largest aluminum company was attacked, impacting the global supply chain. These A-share companies have production capacity.

What are the long-term impacts of Iran’s retaliatory actions on the aluminum supply chain?

Conflicts in the Middle East are escalating from maritime struggles in the Strait of Hormuz to direct physical attacks on key industrial facilities.

According to a report by Xinhua News Agency on March 29, two large aluminum plants in the Gulf states of Bahrain and the United Arab Emirates recently confirmed they were attacked by Iran. The attacks resulted in injuries and property damage.

Bahrain Aluminum Company stated on the 29th that its plant was struck by Iran on the 28th, resulting in two minor injuries, and the company is assessing property damage. This company and its parent company previously declared “force majeure” due to disruptions in shipping through the Strait of Hormuz, leading to a production reduction of about 20%.

One of the world’s largest aluminum producers, Emirates Global Aluminium, also confirmed on the 28th that it was attacked by Iran. The company’s plant in the Abu Dhabi industrial zone suffered significant damage, with several Indian and Pakistani workers injured.

The Iranian Islamic Revolutionary Guard Corps issued a statement on the 29th saying that the Revolutionary Guard used missiles and drones to strike two aluminum plants in the UAE and Bahrain related to the US military and aerospace industry, in retaliation for the US-Israel attacks on Iranian steel mills and other civilian facilities.

Unlike shipping disruptions, physical attacks on core smelting facilities have long-tail effects. Gu Fengda, chief analyst at Guosen Futures, pointed out that even if the situation eases in the future, it will not be easy for aluminum plants to resume production, as equipment maintenance, safety assessments, and the capacity ramp-up period often take over 6 to 12 months.

Data shows that aluminum is known as the “backbone of modern industry” and is an important metal in the global industrial “basket.” It is also one of the non-oil commodities most affected by the conflicts in the Middle East. Interruptions in aluminum supply could tighten the supply chains of advanced manufacturing sectors, driving up production costs in the automotive, aerospace, and construction industries.

As the third-largest production region for electrolytic aluminum globally, the six Middle Eastern countries (Iran, UAE, Bahrain, Saudi Arabia, Qatar, Oman) are expected to have an electrolytic aluminum production capacity of 7.051 million tons per year by 2025, accounting for about 9% of global total production. The combined capacity of the two attacked enterprises accounts for over 6% of the global total capacity.

It is noteworthy that the aluminum supply chain in the Middle East exhibits a significant “two ends external” structure. Shenwan Hongyuan pointed out that the total alumina production capacity in the region is only 4.492 million tons per year, with a self-sufficiency rate of less than 34%. Nearly 9 million tons of alumina gap is highly dependent on imports, and the raw material supply lifeline is entirely tied to the safety of shipping in the Strait of Hormuz; at the same time, 73% of the primary aluminum produced in the region is used for export, resulting in a fundamentally weak risk resistance in the supply chain.

In fact, since the outbreak of the current US-Iran conflict on February 28, LME aluminum prices once surged to $3,546.5 per ton, reaching a nearly four-year high, and the main contract for Shanghai Futures Exchange aluminum also surged past 25,000 yuan per ton. However, as the market began to worry about inflation and economic slowdown risks, the non-ferrous metal sector significantly declined, and aluminum prices saw a noticeable retreat under the overall pressure of the non-ferrous sector. As of now, the LME aluminum price has increased by 9.59% this year, while the Shanghai aluminum main contract has risen by 3.99%.

Looking ahead, CICC forecasts that if the Middle East blockade continues into Q2 and oil prices fluctuate in the range of $100-120 per barrel, the dual cost push of energy and raw materials will reshape the pricing logic of aluminum and nickel. In this scenario, the energy share in the average cost of electrolytic aluminum will soar to over 40-50%. Additionally, around 9% of global capacity in the Middle East may undergo preventive shutdowns due to disruptions in raw material and energy supply, while the decline in demand is relatively limited, suggesting that the global aluminum supply-demand balance may remain in a state of shortage, supporting a fluctuating upward trend in aluminum prices.

CITIC Securities research report states that with the resumption of the Iran-Israel conflict, risks to aluminum production capacity, shipping capability, and energy supply in the Middle East region have significantly increased. The subsequent disruptions in the aluminum supply chain in the Middle East and even risks of a secondary energy crisis overseas cannot be ignored. Looking back at the energy crisis of 2021-2022, aluminum prices and the sector saw maximum increases of 60%/100%. Looking to the future, rising concerns over aluminum supply may lead to price increases that exceed previous expectations. Coupled with the strong long-term supply-demand logic in the aluminum industry, we remain optimistic about the price valuation of the aluminum sector.

In fact, some domestic aluminum companies have already benefited from the rising aluminum prices. Tianshan Aluminum announced on March 29 that it expects a net profit attributable to shareholders of the listed company of 2.2 billion yuan in the first quarter of 2026, a year-on-year increase of 107.92%; the non-recurring net profit is expected to be 2.185 billion yuan, a year-on-year increase of 110.45%.

The company stated that the growth in performance mainly comes from the partial production capacity of the 1.4 million tons electrolytic aluminum green low-carbon energy efficiency improvement project, with electrolytic aluminum production and sales volume increasing by about 10% year-on-year; at the same time, the sales price of electrolytic aluminum products increased by about 17% year-on-year, achieving a synergistic effect in quantity and price.

(Disclaimer: The content of this article is for reference only and does not constitute investment advice. Investors act on this basis at their own risk.)