Those affected by the war in the Persian Gulf are not only hydrocarbon exporters and chemical substances but also aluminum producers, a metal widely used in almost every sector of the real economy, from the packaging industry to smartphone manufacturing, to aircraft and vehicle construction. Some major producers in the Middle East, such as the Bahraini company Aluminium Bahrain and the Qatari Qatalum, have had to reduce their output. And several Western and Asian car manufacturers are already experiencing supply problems: if the crisis does not ease, by June or July they may have to slow down or even stop their plants.
AMONG CAR MANUFACTURERS, PANIC BUYING OF ALUMINUM IS SPREADING
In the automotive sector, panic buying has already started, a rush to purchase driven by fear of running out of material. Some car manufacturers fear that their aluminum stocks could run out within a few months: if the conflict – which began four weeks ago – continues for much longer, the consequences for vehicle production could be severe.
A car manufacturer interviewed by the Financial Times, which did not reveal its identity, said it is trying to use as much scrap aluminum as possible instead of primary metal. Some Japanese manufacturers, meanwhile, are reportedly considering resuming purchases from Russia, lacking alternatives. Toyota’s CEO, Koji Sato, pointed out that Japan is dependent on the Middle East for aluminum supplies.
HOW MUCH DOES THE PERSIAN GULF WEIGH IN THE GLOBAL ALUMINUM MARKET
Not only Japan, in fact, but also the United States and European countries import large volumes of aluminum from the Gulf region, which accounts for nearly 10 percent of the world’s refined aluminum production. However, Japan’s exposure is indeed much higher than Europe’s: 25 percent of Japan’s aluminum imports come from the Persian Gulf, compared to 14 percent for Europe.
“It is very difficult to compensate for the entire volume lost from the Middle East. It is a very delicate supply chain,” said a Japanese company executive supplying components to car manufacturers to the Financial Times. Not to mention that the rise in natural gas prices, and consequently electricity – another consequence of the war in the Persian Gulf – could also force aluminum smelters located in other parts of the world to reduce production.
Aluminum production consumes a huge amount of energy, to the point that the metal is nicknamed “solid electricity”: to produce one ton of aluminum, the same electricity consumed in a year by five households in Germany is used.
BETWEEN PRICE INCREASES AND SHORTAGES
Aluminum prices on the London Metal Exchange rose by up to 12 percent with the outbreak of the war. The Japanese, however, speak of increases of 30-40 percent.
There is already a shortage of certain specific types of aluminum products, such as the alloys used in the production of wheels and blocks. A sector operator explained to the Financial Times that European car manufacturers are particularly vulnerable because they must meet particularly strict technical specifications, so it could take up to eighteen months to select an alternative supplier for these products.
