Forces Majeures, Middle East Smelter Closures Boost Aluminum Prices

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Written by Paul Wiseman for IIR News Intelligence (Sugar Land, Texas)

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Summary

Gas supply shortages and the closure of the Strait of Hormuz due to the war in the Middle East has shut in significant aluminum processing, causing prices to rise.

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Paying the Price

As the U.S./Israel-Iran conflict continues, global markets in many sectors are reacting, and aluminum is one that is directly affected. Force majeure facility closures are threatening a worldwide shortage of the metal.

According to Fastmarkets, a global commodity price-reporting agency (PRA), aluminum prices out of Rotterdam were $320-350 per tonne on Tuesday, up sharply from $300-340 per tonne a day earlier and up month-on-month from $260-310 per tonne.

That pricing refers to supplies in-warehouse, duty-unpaid, in Rotterdam, for 99.7% aluminum. Prices have also spiked as much as 5.1% in London, which is the most since November of 2024.

What Is Closed

Qatalum, Qatar: Global aluminum producer Hydro, which owns 50% of Qatalum, on Tuesday sent a force majeure notice to its customers, when it learned that production was ramping down at the Qatar plant, with expected closure by the end of March. The plant has a capacity of 585,000 tons per year, according to Industrial Info's Global Market Intelligence (GMI) Metals & Minerals Plant Database. GMI subscribers can view the plant profile.

The company said the shutdown decision "was made after the company's gas supplier [Qatar Energy] informed it of a forthcoming suspension of its gas supply."

Long-term supply and the pricing implications are significant, said Joe Govreau, Industrial Info's vice president of research for Metals & Minerals.

"Whenever hostilities cease and a restart is possible, ramping back up to full production will take six months to one year," he said.

Aluminium Bahrain (Alba): This company also used force majeure to halt shipments to some customers. While Qatalum's issue was natural gas supply, Alba's concern is the blockage of the Strait of Hormuz, which has effectively stopped outbound shipments there.

Alba's operation includes one of the world's largest aluminum smelters, producing about 1.62 million tonnes in 2025, according to its website. The Middle East as a whole, including the United Arab Emirates (UAE), produces about 10% of the world's refined aluminum.

The U.S. and European Union depend heavily on imports from this region.

By the Numbers

• 10%: Amount of the world's aluminum smelting hosted in the Middle East
• 2: Aluminium Bahrain smelter's ranking among world aluminum processing plants. While there are no official shutdowns in the UAE, reports are that its top supplier is looking to tap stocks from outside the region to keep customers supplied.

Aluminum Markets Already Somewhat Strained

As the world's second most popular metal, trailing only steel, aluminum is a key component of such widely divergent uses as auto parts, appliances, beverage cans and cooking. Aluminum's benefits include its abundance and low cost compared to copper and others. Because of this, traders and economists are concerned about possible growth of the force majeure trend, as few factories stockpile the metal, buying only on a just-in-time basis.

Supplies of aluminum were already strained in recent years due to fragilities in the supply chain, which includes bauxite mines, alumina refineries and alumina smelters. Often these are supplying specialized forms of aluminum, for which replacements are hard to come by.

Max Layton, an analyst at Citi, was quoted as saying that aluminum prices on the London Metal Exchange could rise as high as $4,000 per tonne from $3,322 if the disruption continues.

Another issue is that, as with other metals, China dominates global aluminum markets--but Beijing imposed a domestic production cap in 2017, in spite of the fact that the nation's domestic demand was rising. Before the Iran conflict began, analysts felt the world could absorb the Chinese curbs, but with the slowdown in Middle East supplies, worldwide stockpiles could run low.

Record Low Supplies

Supplies already are low in many places. Revinitiv data reports that U.S. aluminum Comex warehouse stocks are near record lows, and so are those in the London Metal Exchange warehouse network in Europe and Asia.

Aluminum markets were somewhat on edge due to the closure of Mozambique's 575,000 ton-per-year Mozal smelter, which was a significant supplier to Europe.

The Strait in Perspective

It has been widely reported already that the Strait of Hormuz is the pathway for 20% of the world's crude oil, but it also hosts 10% of the world's aluminum shipping. Even though U.S. President Donald Trump has offered naval escorts for oil and other commercial vessels, shippers have seen too many isolated drones fly under the radar to feel safe about sending ships through the strait while the conflict continues.

Key Takeaways

• Aluminum is the world's second most popular metal, and any shortage in its supply caused by force majeure closings in the Middle East could create shortages and price increases for the metal and for finished products that rely on it.
• Restarting the Qatar refinery, even once hostilities end, could take six months to a year.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).