The disruption has driven aluminum prices higher as traders grapple with shrinking global inventories|uc_rusal_photo_gallery|CC BY-SA 2.0
Iran’s weekend strikes on major aluminum production facilities in the Middle East have global markets reeling.
Emirates Global Aluminium (EGA) reported “significant damage” to its facility in Abu Dhabi, while Aluminium Bahrain is currently assessing its site after it was struck the same day. The company had already slashed production by 19% earlier this month after supply routes through the Strait of Hormuz were disrupted.
To add to the woes, the closure of the Strait has crippled export capacity, trapping resources from the region, which typically accounts for 9% of the world’s aluminum supply.
The disruption has driven aluminum prices higher as traders grapple with shrinking global inventories. Goldman Sachs warned that these rising costs will likely weigh on the broader global economy. India’s Hindalco Industries recently invoked force majeure clauses, citing war-related disruptions to its own aluminum operations.
The timing is particularly sensitive for the UAE, which is the second-largest aluminum supplier to the US and a major investor in American infrastructure, including a new smelter in Oklahoma.