Iranian strikes on Gulf smelters open a 10% price surge in aluminium
Iranian missiles and drones struck two of the Gulf's largest aluminium facilities over the weekend, dealing a serious blow to a supply chain that feeds downstream manufacturing from automotive components to packaging and electric vehicle batteries.
Emirates Global Aluminium, one of the world's largest aluminium producers outside China, reported "significant damage" at its Abu Dhabi site. Aluminium Bahrain said it was still assessing the extent of damage at its facility. Iran's Islamic Revolutionary Guard Corps claimed responsibility for both strikes.
Aluminium prices are on course for a 10% gain in March, according to Bloomberg, a move that reflects the immediate uncertainty over output volumes from two producers that sit at the centre of Gulf industrial capacity.
The supply disruption carries two distinct risks for portfolio managers. In the short term, smelter damage constrains physical availability of primary aluminium at a moment when US import channels were already under pressure. Reuters reported that the strikes are blowing a hole in the US aluminium supply chain specifically, compounding a structural dependency on Gulf and Canadian production.
The longer-term risk, flagged by analysts cited by the South China Morning Post, is a durable reorientation of global production toward China. If Gulf smelters face prolonged reconstruction timelines, buyers will redirect procurement, and Chinese producers, who already dominate global output, are best positioned to fill the gap. That outcome would give Beijing additional pricing influence over a metal central to the clean energy transition.
The broader industrial and trade implications extend beyond aluminium. The Strait of Hormuz, through which Gulf export flows pass, is already disrupting electric vehicle supply chains, with manufacturers facing delays to components that were intended to reduce dependence on oil-linked logistics.
The precise production volumes lost at EGA and Aluminium Bahrain have not been disclosed. Until damage assessments are completed, the market is pricing uncertainty rather than confirmed output loss, which adds a further layer of volatility risk.
