On March 28, Iran struck two of the largest aluminum refining complexes in the Middle East. Emirates Global Aluminium reported “significant damage” to the Al Taweelah site in Abu Dhabi.
Aluminium Bahrain also confirmed that its plant was targeted. The extent of the damage is still being assessed: neither company has provided detailed updates. But the numbers involved alone are enough to define the scale of the event.
EGA’s Al Taweelah site includes a 1.5 million ton/year smelter and a 2.4 million ton alumina refinery. Alba in Bahrain had already announced on March 15 a 19% capacity cut, about 300 thousand tons/year, due to supply difficulties through the Strait of Hormuz. Each of these plants produces about 2% of the global supply. The weekend attacks therefore targeted 4% of world production, or 10% of ex-China supply. This is not a detail: it is an event that reshapes market balances.
The greatest risk is not the immediate physical damage, but the sudden loss of power supply. Primary aluminum electrolytic cells cannot tolerate interruptions: without electricity, the molten metal begins to solidify within hours. Compared to a controlled shutdown, frozen cells require a deep reconstruction of the entire infrastructure. Restart times for plants of this size can extend from 9 to 12 months or more. This is not extraordinary maintenance: it is structural rebuilding.
This scenario brings the aluminum market to a point of no return where logistical disruption, already bullish for spreads and physical premiums, turns into a prolonged destruction of production capacity. And it is exactly this transition that makes current risks structurally different from those of previous weeks: the effects will not end with the reopening of Hormuz. They will last months, regardless of the conflict’s outcome.
On the price front, the historical regression between supply-demand balance and LME price changes indicates that each percentage point contraction in global supply has historically translated into a 3% annual increase. In the worst-case scenario, total closure of Alba (net of already announced cuts) and Al Taweelah, the additional loss would be about 2.8 million tons/year: 3.8% of global supply, with an implied impact of about 11% on prices according to this mechanical framework.
But markets do not move on regressions: they move on sentiment, positioning, and expectations of future risk, all factors that historically amplify, not dampen, fundamental moves.
Key message: $4,000 per ton on the LME is no longer an extreme hypothesis. It is the natural trajectory of a market where supply is physically hit, logistical alternatives are saturated, and recovery times are measured in quarters, not weeks.
