GCC aluminium production outlook revised for Q2 2026 after April output shock

As the GCC stepped into Q2 2026, the April aluminium output saw a drastic dip, with the daily average falling to 10,989 tonnes per day in April 2026, a 26.87 per cent M-o-M decline from the March levels of 15,000 tonnes per day. The figure also depicts a 35.36 per cent drop from the pre-conflict daily output volumes of approximately 17,000 tonnes. 

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As April’s monthly average production comes to 330,000 tonnes, the volume draws a grim contrast year-on-year, when the daily output averaged at 16,800 tonnes, and the monthly production totalled 505,000 tonnes, thereby indicating a sharp drop of 34.65 per cent.

The first four months of 2026 yielded a production of 1.76 million tonnes of aluminium by the GCC. Comparing the same period Y-o-Y, production has once again hit a slump, down by 13.02 per cent from 2.03 million tonnes produced between January and April 2025.  

Jonathan Grant, Secretary General at the International Aluminium Association, noted, "What we are seeing in April's numbers is probably not the floor, it is a further deterioration that brings Gulf output to levels not seen in over a decade.” 

Factors driving the decline and its repercussions

Several of the Middle East conflict-related incidents have factored in dragging the production down more than one-third of the previous year’s figures.

The first roadblock in the pathway of production was the closure of the Strait of Hormuz, causing shipping disruptions, compelling Aluminium Bahrain (Alba) to invoke force majeure on certain products from early March. Soon after, Alba announced a controlled shutdown of potlines 1, 2 and 3, cutting off 19 per cent or 308,369 tonnes of its annual production capacity of 1.62 million tonnes. This was followed by the 40 per cent production shutdown of 640,000 tonnes at the integrated aluminium complex Qatalum.

Furthermore, the Iranian missile attacks on the Emirates Global Aluminium (EGA) and Aluminium Bahrain (Alba) facilities led EGA’s Al Taweelah smelter to sustain “significant damage” and cut 60 per cent of its annual production of about 2.8 million tonnes. These incidents crippled up to an estimated 2.3 million tonnes of combined annual capacity.

Combining the deficit volumes in Q1, i.e., 308,369 tonnes from Alba, 1.6 million tonnes from EGA’s Al Taweelah smelter and 256,000 tonnes from Qatalum, the total volume of annual production cut stands around 2.16 million tonnes. Hence, an estimated quarterly production cut appears to be 541,092 tonnes. EGA’s other smelter, the Jebel Ali facility, has a nameplate capacity of 1 MTPA and is operating with restrictions.

The London Metal Exchange (LME) aluminium prices have climbed over 13 per cent since the inception of the conflict on February 28 and are up about 19 per cent year-to-date (YTD), according to Reuters. LME cash offer at the close of the May 14 session stood at USD 3,768 per tonne, continuing to surpass the four-year high benchmark.

Despite contributing only around 9 per cent of global primary aluminium output, the Gulf region plays a far larger role in international trade.  It typically accounts for 19 per cent of the EU’s primary aluminium imports, 28 per cent of Japan’s and 21 per cent of those into the United States. Moreover, South Korea, Thailand and Turkey remain heavily dependent on the region.  

“Aluminium is essential to modern industrial economies, and with countries including the US, Japan and EU relying on Gulf smelters, this appears to be a slow-motion supply chain shock,” the Secretary General mentioned.

China, which accounts for nearly 60 per cent of global aluminium production, has only marginally increased output, while the country’s 45 million-tonne production cap continues to limit any major expansion. At the same time, no other producing region is in a position to quickly compensate for a disruption of this scale.

EGA attempts to bridge output deficit

To mitigate the immediate consequences of the blocked Strait of Hormuz trade corridor, EGA reportedly plans to take over TAQA's stake in the company, which is about 40 per cent, i.e., acquiring about 158,000 tonnes annually, or 13,166 tonnes every month out of Sohar’s annual capacity of about 395,000 tonnes.

This attempt to reduce the deficit would cover only 9.87 per cent of Al Taweelah’s annual production of 1.6 million tonnes. Provided Oman is willing to give up its stake to the UAE, the deficit would still continue to prevail until the Al Taweelah facility is operational within a year.

Revising outlook

Out of the original production capacity of 5.06 million tonnes (approx.), combining EGA (2.8 million MTPA), Alba (1.62 MTPA) and Qatalum (640,000 TPA), a 2.16 million tonnes or 42.69 per cent production deficit can be noticed.

Combining the still operational portions, i.e., Alba’s 1.3 MTPA, EGA’s present nameplate output of 1 MTPA and a potential addition of about 158,000 tonnes to it (1.16 MTPA) and Qatalum’s 384,000 TPA, projected annual production volume amounts to 2.84 million tonnes. Based on this estimate, average monthly production would come around 236,666 tonnes.

Therefore, adding the projected monthly averages for May and June with April’s production volume, the Q2 production outlook appears around 803,332 tonnes, which falls short Y-o-Y of the 1.5 million tonnes Q2 2025 by 47.6 per cent.

Forecasting a difficult phase in the global aluminium value chain, Grant observed, “The region's smelters cannot replenish raw material stocks through the Strait of Hormuz and are trying alternate land routes to keep operating. That equation is now catching up with production in a very direct way.” 

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