Aluminum Prices Rise as Bahrain's Alba Reduces Production

SadaNews - Aluminum prices have increased after one of the world's largest smelters halted about a fifth of its production capacity, deepening the risk of supply shortages as the Iran war chokes supply coming from the Middle East.

On Sunday, Aluminum Bahrain announced that it has begun a gradual shutdown of three production lines, which together represent 19% of its total production capacity. The company, known by the acronym "Alba," is seeking to preserve raw materials amid disturbances affecting shipping through the Strait of Hormuz.

Read more: "Aluminum Bahrain" begins to cut production at the world's largest aluminum smelter.

The metal's price surged by up to 1.6% at the start of trading on the London Metal Exchange, reaching $3,494.50 per ton, before reducing its gains and trading at $3,465.50 per ton by 9:10 AM Shanghai time.

Middle East Share of Aluminum Production

The Middle East represents about 9% of global aluminum production, while Alba's cutbacks exacerbate other reductions that have raised supply concerns and triggered warnings of a deepening shortage for manufacturers. Prices on the London Metal Exchange surged to their highest levels since 2022 late last week.

Alba, which is state-owned, like other smelters, is facing disruptions in outbound metal shipments and supplies of alumina, which is used as feedstock, due to halted shipping activity in the Strait of Hormuz. Alba suspended sales to customers earlier this month, while Qatar was forced to halt some aluminum production due to natural gas shortages.