MethodologyContact usSupportLogin
Key takeaways:
It is creating a dislocation that is more about logistics than a straightforward supply shortage.
On the surface, the situation looks bullish for metal.
Qatar’s Qatalum — almost 650,000 tonnes per year of capacity — is operating at 60% of capacity after gas supplies were reduced.
Originally, the plant was scheduled to enter a controlled shutdown after gas supply was suspended.
Norsk Hydro, which owns 50% of Qatalum, issued a force majeure notice to its customers as a result. Restarts for aluminium potlines rarely happen quickly:
Several other Gulf smelters remain technically operational but commercially constrained, and the market is tightening quickly. That is because the real choke point right now isn’t necessarily production — it’s logistics.
Aluminium Bahrain (Alba) has already declared force majeure on deliveries for some customers.
The company operates the world’s largest smelter at a single site with record production of just over 1.62 million tonnes of metal last year.
Other producers in the region are meanwhile managing inventories while exports slow.
The Gulf matters not just because of how much aluminium it produces, but because of how much exported metal it supplies, particularly to Europe and Asia.
Smelters in the UAE, Bahrain, Saudi Arabia, Qatar and Oman produced 6.159 million tonnes of primary aluminium in 2025, according to the International Aluminium Institute. While that’s only about 8-9% of global output, it accounts for a disproportionately large share of seaborne exports.
Much of this metal moves through the Strait of Hormuz, making the narrow waterway a key choke point: any disruption there hits physical markets disproportionately.
The impact on regional premiums is already evident.
A producer pulled an offer for the supply of aluminium to main Japanese ports (MJP) in the second quarter, revising it upwards by 40% to a premium of $350 per tonne.
Fastmarkets’ daily assessment for aluminium P1020A (MJP) spot premium, cif Japan was $250-300 per tonne on Wednesday March 11, up from $140-185 per tonne on Monday March 2, the first trading day following the US-Israel strikes on Iran.
In Europe, Fastmarkets’ twice-weekly assessment of the aluminium P1020A premium, in-warehouse Rotterdam was $435-470 per tonne on Tuesday March 10, up from $410-445 a week earlier and at its highest level since September 2022.
While LME prices have also edged higher, physical premiums typically respond first when logistics constraints dominate.
Energy risk adds another layer of uncertainty.
Aluminium production is effectively the conversion of electricity into metal, so any curtailment of oil and gas output across the Gulf raises the risk that what is currently a logistics disruption could evolve into a deeper production problem.
The Qatalum cutback is a reminder that energy supply disruptions can quickly cascade into prolonged metal supply losses.
Further upstream, sentiment is notably different.
Asian alumina markets have turned bearish as cargoes originally bound for Middle Eastern smelters are diverted East.
Short-term inventories remain in the Gulf, but the aluminium these shipments underpin is increasingly hard to deliver to consuming regions.
If Gulf smelters continue to operate at reduced capacity, bauxite miners and alumina refiners could be forced to curb production or exports, even as primary aluminium stays tight. This creates a rare dislocation: raw materials accumulating upstream while finished metal faces delivery bottlenecks.
Gulf smelters rely almost entirely on imported feedstocks: either bauxite for local refining in the UAE and Saudi Arabia, or alumina shipped directly from suppliers mainly in Australia, India and Brazil.
The bottleneck extends beyond smelters and feedstocks to the global shipping chain.
Washington’s proposed insurance backstop for vessels operating in the Gulf has been widely questioned for its scale, with analysts noting the gap between available coverage and actual risk exposure remains vast.
Even if insurance were fully available, it does little to address the human factor: crews must still be willing to sail through increasingly volatile waters.
For aluminium, that distinction matters. Delivery delays and risk-averse shipping can mimic a physical shortage, pushing spot premiums higher and adding volatility.
In a logistics-dependent commodity like aluminium, a bottleneck through the Strait of Hormuz can be as disruptive as a full production halt at a smelter. In Hotter Commodities, special correspondent Andrea Hotter covers some of the biggest stories impacting the natural resources sector. Read more coverage on our dedicated Hotter Commodities page here.