Goldman Sachs warns: Middle Eastern aluminum industry faces a long road to recovery, global aluminum prices may face long-term risk of increase

According to Goldman Sachs, the Middle East is an important source of aluminum supply, and the prospects for aluminum supply in the coming years have been overshadowed by the Gulf War. The region currently accounts for one-fifth of global aluminum production outside of China, and it was expected that production capacity would further increase in the coming years. Trina Chen, Co-Head of Goldman Sachs China Equities, said in an interview that supply disruptions caused by conflicts - including an Iranian military attack leading to the shutdown of a large factory - have made this expansion plan more complex. Chen said on Thursday, "We expect that more smelters will be built in the region in the future to meet global demand growth, thanks to the region's energy advantage." However, she added that the current situation has become uncertain, increasing the risk of long-term aluminum price increases. On Wednesday, LME aluminum prices rose to a four-year closing high, as Iran's attack forced the region's largest aluminum producer, Emirates Global Aluminium, to close one of its smelters, pushing prices to the levels of the Russia-Ukraine conflict. The potential blockade of the Strait of Hormuz threatens further production cuts in the region as raw material stocks are running low. After Iranian missile and drone attacks caused a power supply interruption, Emirates Global Aluminium halted operations at its Al Taweelah smelter in the UAE. This forced the facility to shut down abnormally, with the molten metal continuing to cool and harden while still flowing through the equipment. Chen said that aluminum smelters facing "pot freezes" may take six to eight months to resume production. She also noted that the company "needs to decide if the operating environment can remain stable, which will also take some time." Goldman Sachs previously raised its target for LME aluminum prices in the second quarter of 2026 to $3,450 per ton (from $3,200 per ton) and also increased its full-year average price forecast from $3,100 per ton to $3,200 per ton.