The largest aluminum company in the Middle East reported its factory "out of control and shutting down," with Hong Kong-listed aluminum-related stocks defying the trend and strengthening.

Ask AI · How does the suspension of Middle Eastern aluminum plants affect global aluminum price trends?

On April 2nd, Hong Kong stocks related to aluminum concept stocks outperformed the market. China Aluminum, China Hongqiao, and Rusal all gained. In the A-share market, aluminum concept stocks surged then pulled back, with Yun Aluminum and Yiqiu Resources rising over 2%.

According to Caixin, the latest market news states that last weekend, the Tawiara (AlTaweelah ) smelter operated by the United Arab Emirates’ largest aluminum producer, Emirates Global Aluminium (EGA), was attacked by Iranian missiles and drones, and has been forced to shut down due to “out-of-control” smelting equipment.

According to CCTV Finance, recently, Iran attacked two large aluminum producers in the Middle East, and concerns about a global aluminum supply crisis began to intensify. On Monday local time, international aluminum futures prices surged rapidly. Analysts pointed out that, in terms of impact scale, this round of disruptions could become one of the most severe supply disturbances in aluminum market history. The two factories in the Middle East that were attacked have a combined annual capacity of about 3.2 million tons, while the entire Gulf Cooperation Council and its member countries produce over 6 million tons of aluminum. Signs of tight inventories are already emerging. The deliverable stockpiles on the London Metal Exchange were already at multi-year lows, and under the ongoing Middle East conflict, they have further declined. Market reactions have shown a clear “spot premium” phenomenon, meaning spot prices are higher than futures prices, reflecting short-term supply tightening.

The Middle East accounts for about 9% of global aluminum supply. Currently, the aluminum market faces multiple shocks: on one hand, shipping through the Strait of Hormuz is obstructed, making exports difficult; on the other hand, many aluminum production facilities in the Middle East are damaged or shut down; third, global production in other regions is limited, and inventories are already low, leaving little room for buffer.

Goldman Sachs analysts previously forecasted that in the second quarter of this year, the global aluminum market would face a supply shortfall of about 900k tons. This gap will further deplete inventories, reducing global stock coverage to just 45 days, even below the levels during the tight supply period in 2022.

On April 1st local time, the LME aluminum main contract closed at $3,527.50 per ton, up $91.50 from the previous trading day’s close, a rise of 2.66%.

Baosheng Securities stated that the explosion of the two major aluminum plants in the Middle East is the most significant geopolitical supply disruption faced by the global aluminum market in 2026, directly breaking the tight supply-demand balance and causing large fluctuations in domestic and international aluminum futures prices. This event impacts the domestic aluminum futures market through four transmission channels: supply contraction, cost increase, sentiment boost, and export substitution. In the short term, it pushes futures prices sharply higher; in the medium to long term, it drives the price center upward continuously, changing the overall trend of domestic aluminum futures. Currently, the domestic aluminum futures market shows a pattern of “tight supply, demand support, cost solidification, and bullish sentiment,” with core drivers shifting from fundamentals to geopolitical and supply risk factors, significantly amplifying price volatility. For various market participants, close attention should be paid to changes in Middle East situations, capacity recovery progress, domestic and foreign inventories, and demand data, to respond rationally to price fluctuations, and to use futures tools flexibly to hedge risks and seize opportunities. In the medium to long term, under the background of a global aluminum supply gap that is difficult to quickly fill, rigid domestic capacity controls, and strong cost support, domestic aluminum futures prices are expected to remain relatively strong. However, uncertainties such as geopolitical conflicts and demand changes always exist, and market risks should not be ignored. Ongoing attention to subsequent developments and industry chain dynamics is necessary to adjust operations and investment strategies timely and to respond prudently to market changes.

Bank of China Securities pointed out that aluminum capacity in the Middle East faces shutdown risks, high oil prices increase transportation costs, and attention should be paid to investment opportunities in the aluminum sector under supply tightening. It recommends focusing on China Hongqiao, Nanshan Aluminum, China Aluminum, and Yun Aluminum.