Gulf Conflict Causes Major Disruption in Aluminium Supply Chain
The ongoing conflict in Iran has resulted in a significant supply shock in the aluminium market, with Gulf production dropping to its lowest level in over a decade. According to the International Aluminium Institute, regional production rates fell by an annualized two million tons over March and April. This decline is attributed to missile strikes damaging two Gulf aluminium smelters, including Emirates Global Aluminium's Al Taweelah plant, which will take a year to repair. The closure of the Strait of Hormuz has further exacerbated logistical challenges for remaining operations. The Gulf region, a key supplier to the US, Japan, South Korea, and the EU, accounts for over a fifth of non-Chinese aluminium production. Despite these disruptions, the London Metal Exchange (LME) price has only increased by 14% since the conflict began, not reaching the peaks seen during previous geopolitical tensions. 
