One of the world’s largest aluminum producers has halted operations
5 March 15:05
Aluminium Bahrain (Alba), which operates one of the world’s largest smelters, has warned customers of supply disruptions due to the escalating conflict in the Middle East, Reuters reports, according to "Komersant Ukrainian".
According to the article, this has exacerbated aluminum supply problems after the Qatalum smelter in Qatar was shut down the day before. The day before, it became known that QatarEnergy, the Qatari industrial giant that suspended gas liquefaction on March 2 due to an attack by Iran, continued to cut production.
Following this news, aluminum prices on the London Metal Exchange jumped 5.1% to $3,418 per ton, the highest level since April 2022. Analysts say prices may continue to rise, as the region accounts for about 8% of global supply.
Goldman Sachs said prices could reach $3,600 per ton if production in the Middle East is halted for a month.
On March 4, at its peak, the price of the light metal used in construction, transportation, and packaging rose 9% this week after the US and Israel attacked Iran last weekend.
Alba announced force majeure and informed affected customers of delays in contracts because it cannot ship products.
“This is due to the situation in the Strait of Hormuz, which prevents us from shipping. Therefore, we are continuing production, but the metal remains here at Alba,” said a company representative.
The company representative assured that “the team is working intensively to find alternative transportation solutions to minimize the impact.”
According to information on Alba’s website, its smelter is the largest outside China, the world’s largest aluminum producer.
Norsk Hydro, a shareholder in the Qatalum metallurgical plant in Qatar, has declared force majeure for its customers. Hydro said the shutdown of the 648,000 metric tons per year smelter is expected to be completed by the end of March, and a full restart could take six to twelve months.
Premiums for European aluminum, paid in excess of LME prices for physical metal, rose to $436 per ton in April, reaching their highest level in 3.5 years. Premiums in the US jumped to a record $1.075 per pound.
The Alba plant in Bahrain is one of the world’s industry leaders. According to Asharq TV, the plant’s annual capacity exceeds 1.6 million tons of aluminum, making any disruptions in its operations a significant factor for the global metals market.
