Does the Hormuz freeze, hitting 9% global supply, reopen the door for an alternative 5-6 Mt aluminium supplier?

Gulf production and exports

The Gulf Cooperation Council (GCC) countries – led by the United Arab Emirates, Bahrain, Qatar, Saudi Arabia and Oman – host some of the world’s largest aluminium smelters. Emirates Global Aluminium (UAE) alone has 2.7 million tonnes per annum output, and Bahrain’s Alba has 1.6 million tonnes. Qatar’s Qatalum, Oman’s Sohar, and Saudi Arabia’s Ma’aden (Ras Al-Khair) add several hundred thousand tonnes each.

The Gulf industry has grown on cheap gas and energy, but it remains largely import-dependent for alumina and carbon anode materials.

Nearly all Gulf aluminium is destined for export. According to industry reports, virtually the majority of Gulf production is shipped out via Hormuz to major markets. In 2025, the GCC accounted for roughly 21 per cent of US primary aluminium imports, 19 per cent of EU primary imports and 25 per cent of Japan’s primary imports, with significant flows also to South Korea, India, Thailand and Turkey.

These flows bring forth regional supply chain dependence. Gulf smelters also produce semi-finished goods (billets, sheet, wire rod) for downstream industries. Gulf refineries import alumina (often from Australia, which supplies 35-40 per cent of global alumina exports) to feed these smelters, making the region doubly dependent on maritime routes.

Molly Beerman, Executive Vice President and Chief Financial Officer, Alcoa, shares that about 4 million tonnes of their alumina move annually to Gulf refineries. With Hormuz closed, much of that redirected supply is now finding a home elsewhere, probably mainly in Asia.

Disruptions from Hormuz closure

With the outbreak of geopolitical tension since late February 2026, shipping through the Strait of Hormuz has effectively halted, heavily disrupting all Gulf exports, including aluminium. Iran’s message to close the strait and assault nearby shipping lanes (including a reported airstrike on Oman’s Port of Salalah) has made passage highly risky.

Carriers have already started rerouting, wherein shipping lines have announced avoidance of the Red Sea and diverted vessels via the Cape of Good Hope. Freight rates and insurance costs have spiked – for example, CMA CGM imposed multi-thousand-dollar surcharges on containers bound for the Middle East.

As a result, Gulf smelters are cutting production. Aluminium Bahrain (Alba) and Qatar’s Qatalum have declared force majeure on exports. Alba announced a controlled shutdown of three lines (roughly 19 per cent of its capacity) and halted outbound shipments, and Qatalum immediately cut operations due to imminent gas supply issues. Together, these curtailments amount to roughly 570,000 tonnes per year of lost output. UAE’s EGA is still running but has begun re-routing via Oman’s port of Sohar. Alba is also considering alternative routes (e.g. trucking to Jeddah in Saudi Arabia). While Sohar and Fujairah are undamaged so far, these overland routes add cost and time.

Crucially, not only are finished metal flows cut off, but raw materials cannot enter the Gulf either. Gulf smelters lack internal alumina sources, as the UAE and Qatar import nearly all their alumina by sea through Hormuz.

With inbound alumina shipments blocked, Gulf plants risk running out of feedstock in weeks. (Only Saudi’s Ma’aden is fully integrated with its own bauxite mine and alumina refinery.)

Gulf producers face a dual vulnerability — outbound shipments seized and inbound supply cut — forcing some to run down stocks or idle altogether. Even EGA admits it cannot comment fully, but acknowledges logistical challenges under the current situation.

Beyond logistical disruptions, recent developments have further underscored the vulnerability of industrial infrastructure in the Gulf. Reports indicate that Iranian forces have claimed attacks on facilities in the UAE and Bahrain, while Bahrain’s Aluminium Bahrain (Alba) confirmed that one of its sites was targeted. Additional reports also point to damage affecting aluminium assets in the UAE, including facilities linked to Emirates Global Aluminium (EGA). These developments highlight that aluminium production assets are no longer insulated from geopolitical escalation, further increasing risks for regional supply chains.

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Impact on global trade flows

The sudden loss of Gulf metal is rippling through global markets. London Metal Exchange (LME) stocks of aluminium were already low (under 450 thousand as of mid-March), and traders are scrambling. Prices spiked, i.e. LME three-month aluminium briefly hit about USD 3,545 per tonne (a four-year high) in mid-March.

Premiums are soaring – for example, Europe’s duty-paid P1020 premium has jumped 16 per cent since the conflict began, and the US Midwest premium has reached new records.

Supply disruptions are also prompting sharp freight-cost and routing impacts. With Suez chokepoints closed, any Asian aluminium destined for Europe must detour via South Africa, adding 8-15 days to transit times.

Carriers have cut off some Middle East routes entirely. Dubai’s big container hub was reported to be shut on March 7 (reopening only partially). This means not only aluminium but also any inputs shipped through the region face delays. In metals, secondary logistics effects emerge. East-west freight constraints in Asia–Europe corridors will push up costs for alternative suppliers.

Key consumers are already feeling the pinch. US manufacturers, heavily import-reliant (importing 60 per cent of their aluminium needs), have been told to find alternatives. Bloomberg reports that US buyers are rushing to secure non-Middle East supplies from Asia.

Indeed, for the US market, nearly a fifth of aluminium imports came from the Middle East in 2025. With Bahrain and Qatar now offline, that volume must be replaced, or consumers will pay steep premiums. In Europe, the situation is similar: Gulf metal accounts for a large share of European metal imports (nearly one-fifth of primary and some flat-rolled products). Analysts warn that, as European premiums have already hit multi-year highs (over LME cash USD 450 per tonne), even stable Asian suppliers (China, India) cannot quickly plug the gap due to transport delays.

Other importers in Asia and elsewhere will likewise scramble. Japan sources about 25 per cent of its aluminium from the GCC. South Korea, India, Thailand and Turkey also depend on Gulf metal.

Any further conflict escalation could tighten these flows. An Oliver Wyman analysis notes that Hong Kong, Mediterranean and Middle East shipping disruptions threaten inputs like LNG (through Hormuz) and industrial metals alike. In addition, the closure of Oman’s Salalah port (used as an alternate shipping hub) further squeezes regional logistics.

Alternative supplies and market responses

With Gulf shipments constrained, consumers must turn to alternatives – but options are limited. China is the world’s largest producer (over 45 million tonnes in 2025), but is already capped by government policy and focuses on semi-finished exports rather than primary metal for export.

Its smelter system has little spare capacity. Africa’s Mozal aluminium smelter (Mozambique) has been closed since the middle of March 2026, removing another 250 thousand tonnes or so of output in Europe’s supply chain.

Russia is emerging as a potential swing supplier in an increasingly constrained market. The country’s aluminium sector is dominated by Rusal, which produced approximately 4.5 million tonnes in 2025, placing Russia’s total output in the range of 4–5 million tonnes annually. Since 2022, Western sanctions and self-sanctioning by buyers have significantly reduced Russian deliveries into Europe and the United States, forcing a structural reorientation of trade flows (mainly Asia).

However, with Gulf deficits rising, some global buyers may revisit Russian metal. Reuters notes “Russian supply has already pivoted to Asia” due to sanctions, but in theory, it remains a major producer capable of redirecting metal if trade restrictions change.

Any easing of political constraints could bring more Russian metal into global circulation. For example, aluminium analysts already observe customers previously supplied by Middle Eastern smelters now seeking reliable deliveries from alternate sources.

Secondary aluminium (scrap) will also become more valuable. Just as buyers did in past supply crises, fabricators may accelerate scrap collection and recycling. Reports suggest a surge in scrap premiums as end-users chase any available material. But even scrap markets are tight; the US has increased scrap use partly due to tariffs, yet it still heavily relies on imports. Mathematics suggests that there are limited substitutes for millions of tonnes of Gulf primary metal in the short term.

One international trend is the concentration of bauxite/alumina flows into China. At the same time, global alumina flows are being reallocated, with diverted cargoes increasingly moving towards China, placing additional pressure on regional refining and smelting economics. Even if we forget China government’s ban on smelting over 45 million tonnes. Some Middle Eastern firms (e.g. those who have been delivered with raw material like bauxite from Alcoa) already note that diverted alumina cargoes are mostly moving into China, putting cost pressure on Chinese smelters. This helps Asia but does little for Western supply shortages.

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Downstream and premium effects

For fabricators and buyers, the practical effect is higher costs and delays. In Europe, billets and plate producers reliant on Gulf slabs see premiums of LME plus USD 400-700 per tonne levels not seen since late 2022. US Midwest premiums have similarly shot past USD 2,300 per tonne. Customers of Gulf suppliers (e.g. beverage can makers, aerospace firms) are already paying record-high prices. In many cases, Gulf producers have declared force majeure, freeing them from contractual delivery but leaving customers scrambling.

Logistics chains have also been upended. Large buyers are pre-positioning stock in Europe and Asia; freight rates (especially for any Atlantic/Africa routes) have spiked with added conflict surcharges. Container lines have largely suspended Gulf bookings pending clarity on safe routes. Air cargo and rail are being considered for urgent shipments, further driving up costs. In short, the market is bracing for a prolonged disruption, with studies noting that even after hostilities end, it will take weeks for insurers and carriers to resume normal operations.

One notable effect is that existing US smelters, supported by relatively lower and more stable power costs, may see a temporary improvement in competitiveness. However, any meaningful increase in domestic output remains constrained, as restarting idled capacity would require significant time and investment.

However, the United States remains structurally import-dependent, with around 60 per cent of total aluminium demand met through imports, leaving domestic supply, including both primary production and recycled metal, at roughly 40 per cent.

With Gulf sources offline, these buyers (especially those relying on Asian suppliers) will compete with Europe and Japan for the limited metal. Even facilities that escaped the 2022 downturn are now grinding through record prices.

In summary

The current disruption extends beyond a conventional supply shock. It can be rendered as a stress test of how global aluminium trade is structured. A system that has prioritised cost efficiency over redundancy is now being forced to operate under constrained logistics, limited buffers, and concentrated supply routes.

The immediate impact is measurable. Millions of tonnes of Gulf-origin aluminium have been delayed or displaced, premiums have surged across regions, and buyers are competing for a shrinking pool of deliverable metal. At the same time, upstream dependencies, particularly on seaborne bauxite and alumina, have exposed how tightly coupled the system remains to a small number of trade corridors.

In practical terms, this means a shift towards:

• suppliers with stable export routes
• long-term contractual arrangements
• and diversified sourcing strategies that reduce exposure to single-region risks

The current episode demonstrates that the aluminium market, while globally integrated, is not structurally redundant. When a key corridor is disrupted, substitution is slow and incomplete. In such conditions, trusted supply chains (for example, Russia) become a strategic asset rather than a commercial preference.