The global aluminium supply chain is facing its most significant disruption in years following a series of Iranian attacks on major smelting operations in the Gulf over the weekend. The strikes, which targeted the region’s two largest producers, have sent shockwaves through the London Metal Exchange (LME), pushing prices toward levels not seen since the peak of the pandemic.

On Monday, benchmark three-month aluminium on the LME surged by 6%, reaching a high of $3,492 per metric ton. This spike brings the metal within striking distance of its four-year resistance level of $3,546.50. Market analysts warn that if prices break this ceiling, the industry could see a return to the record-breaking volatility of early 2022.

Direct Hits to EGA and Alba

The price rally was triggered by confirmed reports of damage at facilities operated by Emirates Global Aluminium (EGA) and Aluminium Bahrain (Alba).

• Aluminium Bahrain (Alba): The operator of the world’s largest single-site smelter confirmed it is currently conducting a damage assessment following strikes on Sunday. While the company is focused on maintaining operational resilience, it reported that two employees sustained minor injuries during the Saturday attack.
• Emirates Global Aluminium (EGA): The UAE-based producer—the largest in the Middle East—reported “significant damage” to its Al Taweelah site following missile and drone strikes.

These facilities are critical to the global market, with Gulf producers accounting for approximately 9% of the world’s total aluminium supply.

Logistics and Supply Fears

The physical damage to the smelters compounds an already dire logistical situation. Since the onset of the U.S.-Israeli conflict with Iran, the effective closure of the Strait of Hormuz has paralyzed traditional shipping routes. This blockade has prevented the export of finished ingots to key markets in Europe and North America and hindered the import of essential raw materials like alumina.

Alba had already begun proactive measures earlier this month, initiating a controlled shutdown of roughly 19% of its capacity to preserve equipment amid the shipping deadlock. However, the direct targeting of industrial infrastructure introduces a new, more permanent risk factor to the “geopolitical premium” currently baked into metal prices.

Market Reaction

The volatility has extended beyond the LME. In Shanghai, the most active aluminium contract rose nearly 4%, while shares in major Western producers saw a significant lift as investors anticipate a prolonged supply vacuum. Rio Tinto and South32 saw gains of 2% and 7% respectively in Monday trading.

For the packaging sector, which relies heavily on a steady flow of primary aluminium, the prospect of $4,000-plus per ton metal is no longer a distant fear. “The latest attacks increase the probability of a prolonged disruption scenario,” noted analysts at ING Economics. “Supply losses could persist even if tensions ease, reinforcing a strong upside risk to prices.”

As the industry awaits further details on the repair timelines for the Al Taweelah and Alba sites, the focus remains on whether global inventories—which have already been thinning—can provide enough of a buffer to prevent a full-scale supply crisis.