Interpretation of the surge in non-ferrous aluminum: Aluminum plants in the Middle East were attacked, with potential global production cuts exceeding one million tons, and the tightening trend in supply may be irreversible

# Chen Zhen

Source: Wall Street News

Aluminum smelters in the Middle East hit by Iranian missiles; Alba cuts output by about 20%, and 1.6 million-tonne smelting facilities in the UAE damaged. Coupled with ongoing production cuts in Europe, Africa and other regions, global potential annual output reduction reaches 1.5–2 million tonnes, with an irreversible trend of tightening supply. On the demand side, rigid demand from infrastructure and new energy provides strong support, forming a solid bullish case for aluminum prices.

## I. Market Performance

The non-ferrous aluminum sector surged in early trading, with multiple stocks hitting the daily limit, including Minfa Aluminum, Tianshan Aluminum, and Chang Aluminum Co.

## II. Event: Aluminum Smelters Attacked Across the Middle East, Aluminum Futures Jump Sharply

1) Aluminum Bahrain (Alba) confirmed on March 29 that its plant was struck by Iranian attacks on March 28 and that it is assessing property damage. Previously, the company had declared **force majeure** due to shipping disruptions in the Strait of Hormuz and cut production by approximately 20%.

On the same day, Emirates Global Aluminum (EGA) disclosed that its Taweelah smelting complex at Kezad in Abu Dhabi suffered severe damage in Iranian missile and drone attacks, with multiple employees injured. According to the company’s announcement, the smelter produced 1.6 million tonnes of foundry metal in 2025. (Xinhua News Agency)

2) On March 30, Shanghai aluminum futures jumped 3.53%, and LME aluminum prices rose more than 5%.

3) On the evening of March 29, Tianshan Aluminum released a performance forecast, expecting net profit attributable to shareholders of 2.2 billion yuan in Q1 2026, up 107.92% year-on-year; adjusted net profit was 2.185 billion yuan, up 110.45% year-on-year.

On March 27, Aluminum Corporation of China (Chalco) released its annual report, achieving operating revenue of 241.125 billion yuan in 2025, up 1.69% year-on-year; net profit attributable to shareholders was 12.674 billion yuan.

## III. Institutional Interpretations

1) The Middle East accounts for nearly 9% of global aluminum capacity. Combined with persistent production cuts in high electricity price regions such as Europe and Africa (Mozambique has suspended 580,000 tonnes of output), global potential annual output reduction reaches **1.5–2 million tonnes**, with an expected annual supply decline of 3%–5%, representing an irreversible tightening trend. (Huaxi Securities)

Global primary aluminum output stood at 73.01 million tonnes in 2024. Future new primary aluminum projects are concentrated in Indonesia, India, the Middle East and other regions, but capacity ramp-up has been slow due to power supply and infrastructure constraints. Overseas output growth in 2026 is expected to be only 515,000 tonnes (taking into account reductions in Mozambique and Qatar), with global supply growth projected to stay below 2%. (Shenwan Hongyuan)

2) The impact of the Middle East on the global aluminum supply chain is transmitted through three channels:

First, export disruptions create structural mismatches. Iran exports about 260,000 tonnes annually, and the closure of the Strait of Hormuz has led to “glut in exporting countries and shortages in importing countries.”

Second, interrupted alumina imports affect Middle Eastern production. According to a preliminary assessment by ALADDIN, a supply cutoff would impact 380,000 tonnes of monthly primary aluminum output. Meanwhile, global visible inventories stand at only 1.62 million tonnes, equivalent to roughly 8 days of global production, representing an extremely low inventory-to-consumption ratio.

Third, damage to production equipment and infrastructure leads to a long post-war reconstruction cycle. Primary aluminum is characterized by high energy consumption and production continuity; once halted, restarting requires a long cycle and high costs. If Iran’s 800,000-tonne capacity and production cuts/suspensions in neighboring countries materialize, the global supply shortfall will widen significantly in 2026. (China Merchants Securities)

3) On the demand side, even in a weak economic environment, primary aluminum — as an industrial product with rigid demand in infrastructure, real estate and new energy — has historically seen consumption decline by only 1%–2% during downturns, a much smaller contraction than on the supply side.

Operating rates across downstream aluminum sectors have rebounded divergently, with consumption gradually entering the peak seasonal pattern.

- Aluminum cable operating rates rose 1 percentage point month-on-month to 66%, supported by strong grid construction stocking demand and accelerated implementation of UHV and power transmission projects.

- Aluminum sheet and strip operating rates climbed to 71%, underpinned by steady energy storage demand; automotive sheet orders improved month-on-month but remained weak year-on-year, while surging freight rates from the Middle East suppressed incremental demand.

- Aluminum foil operating rates held steady at 73.6%, boosted by a confluence of traditional peak season demand and short-term battery foil needs; food packaging foil and pharmaceutical foil provided stable underlying support, though battery foil production scheduling slowed ahead of a tax rebate policy shift.

- Aluminum profile operating rates rose 4 percentage points to 59%, with construction demand recovering moderately amid aluminum price corrections; industrial demand was strongly supported by new energy and power orders, with new production lines coming online adding incremental volume. (Guohai Securities)

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