Aluminum Market Hit by Historic Supply Shock Amid Middle East Conflict

Alternative supply options are limited. China faces production caps, while high energy costs hinder smelter restarts in Western economies.

SEATTLE (Scrap Monster): The global aluminum market is facing an unprecedented supply shock as escalating tensions in the Middle East disrupt critical exports from the Gulf, raising fears of sharp price increases across multiple industries.

According to Mercuria, the crisis represents a “black swan” event, with analyst Nick Snowdon warning that the scale of disruption is the largest seen in base metals markets since 2000. The region accounts for nearly 7 million metric tons, or about 9% of global aluminum smelting capacity, much of which is now offline due to power outages and logistical constraints.

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Supply deficits are rapidly widening, with Mercuria projecting a shortfall of at least 2 million tons this year, while Wood Mackenzie estimates the gap could reach 4 million tons. Meanwhile, global inventories remain critically low, intensifying pressure on prices in key markets such as the U.S. and Europe.

Alternative supply options are limited. China faces production caps, while high energy costs hinder smelter restarts in Western economies. Although Russia could fill the gap, sanctions complicate access.

Even if disruptions ease, recovery may take up to a year, signalling sustained volatility ahead.

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