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

Conflicts in the Middle East are escalating from shipping disputes in the Strait of Hormuz to direct physical strikes against core industrial facilities.

According to a report from Xinhua on March 29, two large aluminum plants in the Gulf states of Bahrain and the United Arab Emirates recently confirmed that they were attacked by Iran. The attacks resulted in injuries to personnel 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 the property damage. This company and its parent company had previously declared “force majeure” due to shipping disruptions in the Strait of Hormuz, reducing production by about 20%.

One of the world’s largest aluminum producers, Emirates Global Aluminium, also confirmed on the 28th that it was attacked by Iran, with one of its plants located in the Abu Dhabi industrial area sustaining significant losses and several Indian and Pakistani workers injured.

The Iranian Islamic Revolutionary Guard Corps issued a statement on the 29th saying that the Revolutionary Guards struck two aluminum plants in the UAE and Bahrain related to the U.S. military and aerospace industries with missiles and drones, in retaliation for U.S. and Israeli strikes 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, resuming production at aluminum plants will not be easy, as equipment maintenance, safety assessments, and the ramp-up period often take more than 6 to 12 months.

Data shows that aluminum is regarded as the “skeleton of modern industry,” an important metal in the global industrial “basket,” and is also one of the non-oil commodities most affected by conflicts in the Middle East. Disruptions in aluminum supply could lead to tighter supply chains in advanced manufacturing, raising production costs in the automotive, aerospace, and construction sectors.

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

It is worth noting that the aluminum industry chain in the Middle East shows a significant “external dependence” 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%. The nearly 9 million tons of alumina gap is highly reliant on imports, with the raw material supply lifeline completely tied to the shipping safety in the Strait of Hormuz; at the same time, 73% of the primary aluminum produced in the region is used for export, resulting in an inherent lack of supply chain risk resistance.

In fact, since the onset of the current U.S.-Iran conflict on February 28, LME aluminum prices soared to $3,546.5 per ton at one point, reaching a nearly four-year high, and the main contract for Shanghai Futures Exchange aluminum also stood at 25,000 yuan per ton. However, as the market began to worry about inflation and the risk of economic slowdown, the non-ferrous metal sector experienced a noticeable decline, leading to a significant retreat in aluminum prices under the overall atmosphere of the non-ferrous sector. As of now, the LME aluminum price has increased by 9.59% year-to-date, while the increase for the main contract on Shanghai aluminum is 3.99%.

Looking ahead, China International Capital Corporation predicts that if the Middle East blockade continues into Q2 and oil prices fluctuate between $100 and $120 per barrel, the dual cost push from energy and raw materials will reshape the pricing logic of aluminum and nickel. In this scenario, the average cost of electrolytic aluminum will see the energy proportion soar to over 40-50%. Additionally, about 9% of global production capacity in the Middle East may face preventive shutdowns due to disruptions in raw material and energy supplies, while the demand contraction remains relatively limited, leading to a potential global aluminum supply-demand imbalance, supporting a volatile upward trend in aluminum prices.

CITIC Securities reports that with the resurgence of the Israel-Iran conflict, risks to aluminum production capacity, shipping capabilities, and energy supply in the Middle East region have significantly increased. Future disruptions in the aluminum industry chain in the Middle East and even the risk of a secondary energy crisis overseas cannot be ignored. Reviewing the energy crisis of 2021-2022, the maximum increase in aluminum prices and the sector reached 60%/100%. Looking forward, rising concerns over the supply in the aluminum industry chain may lead to price increases exceeding previous expectations. Coupled with the strong supply-demand logic in the aluminum sector over the medium to long term, the outlook remains positive for the aluminum sector’s price valuation to rise.

In fact, some domestic aluminum enterprises have already benefited materially from the rise in aluminum prices. Tianshan Aluminum Industry announced on March 29 that it expects a net profit attributable to shareholders of the listed company to be 2.2 billion yuan in the first quarter of 2026, a year-on-year increase of 107.92%; the non-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 primarily stems from the partial production of the 1.4 million-ton green low-carbon energy efficiency enhancement project for electrolytic aluminum, 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 synergy of volume and price.

(Source: 21st Century Business Herald)