The blockade in the Hormuz Strait has affected the global aluminum market: Bahrain Aluminum Industry was forced to reduce production by 19% and Goldman Sachs warns that aluminum prices may exceed $4,000.

Due to the disruption in the navigation of the Hormuz Strait, one of the world's largest individual smelters - Bahrain Aluminum Industry (Alba) has been forced to initiate a production reduction plan in mid-month due to the dual pressures of hindrance in metal exports and limited supply of raw materials. As a core supply location for the global aluminum industry, the logistical disruption in the Middle East has evolved into substantial production losses. The company has phased out three main production lines, directly impacting about 19% of its annual capacity output, in order to extend the use of existing bauxite and alumina stocks to ensure the long-term safe operation of the factory. This supply tightening is not an isolated event, but a chain reaction in the entire regional smelting industry. Qatar's Qatalum smelter had already reduced its production capacity to about 60% due to conflict disruptions in the upstream natural gas supply. Meanwhile, although Emirates Global Aluminum (EGA) in the UAE is currently maintaining normal factory operations, severe delays in metal shipment and shipping have forced the company to consider using overseas strategic stocks to fulfill delivery contracts. The Middle East region accounts for 9% of global aluminum production, and the production cuts at Bahrain Aluminum Industry combined with similar measures in other regions have heightened market concerns about supply shortages and warnings about more serious shortage risks for manufacturers. Specifically, Bahrain Aluminum Industry had suspended sales to customers earlier this month, while Qatar had to halt some aluminum production due to a shortage of natural gas. Stimulated by this production cut news, international aluminum prices have shown strength on the London Metal Exchange (LME), peaking at $3,546.50 per ton, setting a new record since 2022. As nearly one-fifth of Europe's primary aluminum imports heavily rely on Middle East supplies, the substantial reduction in current production and the logistics bottleneck are exacerbating global market supply shortage concerns. Analyses by international financial institutions such as Goldman Sachs suggest that if the closure of Middle East waterways continues to deplete regional stocks, aluminum prices are likely to surpass the $4,000 per ton threshold, thereby having a profound impact on the cost structure of the global downstream manufacturing industry. In early trading on the London Metal Exchange, the metal briefly rose by 1.6% to reach $3,494.50 per ton, before narrowing its gains. As of the latest update, the trading price stands at $3,420.00 per ton.