Aluminium Crisis: The Ripple Effects of the Iran War

The Iran war has triggered a major crisis in the global aluminium market. Damage to key smelters in the Middle East has led to a massive supply deficit, affecting sectors like construction and transport. Policymakers face tough decisions as Western nations feel the impact of reduced aluminium availability.

The ongoing conflict in Iran has severely disrupted the global aluminium market, leading to a huge supply deficit with far-reaching consequences across various industries. Experts warn that even if hostilities end immediately, recovery could take up to a year, as key smelters have suffered significant damage.

Emirates Global Aluminium's Al Taweelah smelter and Aluminium Bahrain have been directly impacted, compounding a pre-existing shortage of power across the region. The Strait of Hormuz is witnessing shipping constraints, and the global supply deficit could rise to 4 million metric tons this year, according to Wood Mackenzie.

Western buyers are poised to bear the brunt of the crisis, with the London Metal Exchange's aluminium stocks dwindling. The shortage is forcing Western policymakers to confront tough decisions on whether to relax trade barriers with producers like China and Russia to mitigate the crisis.

(With inputs from agencies.)