Aluminium Supply Shock: Gulf Smelters Shut Down and Declare Force Majeure Amid Iran Conflict

On March 2, 2026, QatarEnergy halted liquefied natural gas (LNG) production at its Ras Laffan Industrial City and Mesaieed Industrial City facilities following military strikes by Iran on Qatari industrial infrastructure. The attacks were part of broader Iranian retaliatory operations across the Gulf region, triggered by U.S. and Israeli airstrikes against Iran that began on February 28, 2026.

The LNG shutdown immediately cut off the natural gas supply powering Qatar's aluminium smelting operations. On March 3, QatarEnergy formally announced the suspension of several downstream products, including aluminium, urea, polymers, and methanol. The same day, Qatalum, a 50/50 joint venture between Norsk Hydro and Qatar Aluminium Manufacturing Company (QAMCO), initiated a controlled shutdown of its aluminium smelter at the Mesaieed Industrial City. The smelter has a nameplate capacity of 636,000 metric tonnes of primary aluminium per year and a casthouse capacity of 664,000 metric tonnes. Qatalum produced 687,000 tonnes of primary aluminium in 2025. The controlled shutdown is expected to be completed by the end of March 2026. A full restart could take six to twelve months, though Norsk Hydro stated that no definitive restart date is known.

Norsk Hydro issued a Force Majeure notice to all Qatalum customers on March 3. The company confirmed it was working to mitigate the consequences and evaluating alternative supply channels to fulfill its contractual commitments. Qatalum produces LME-certified aluminium sows, primary foundry alloys, and extrusion ingots, with export markets primarily in Asia (66%), Europe (18%), and North America (12%).

The disruption extended well beyond Qatar. In Bahrain, Aluminium Bahrain (Alba), one of the world's largest aluminium smelters outside China with an annual production capacity of approximately 1.62 million metric tonnes, declared Force Majeure on its deliveries on March 2. Alba clarified that the declaration was solely related to shipping disruptions through the Strait of Hormuz and not to any damage to its smelter, which continued operating. Alba confirmed that metal was being produced but remained stranded at facility warehouses due to the inability to ship through the strait. An Iranian attack on the Mina Salman port in Bahrain on March 1 further heightened security concerns.

In the United Arab Emirates, Emirates Global Aluminium (EGA), the region's largest producer with over 2.5 million tonnes of annual capacity, flagged the use of offshore inventories to manage loading delays. A fire broke out at a berth at Dubai's Jebel Ali port after debris from an aerial interception landed near the facility, underscoring the proximity of the conflict to critical aluminium infrastructure. All major regional ports were reported closed for security reasons.

The Gulf Cooperation Council (GCC) collectively produced approximately 6.159 million tonnes of primary aluminium in 2025, accounting for around 8% of global supply and an even larger share of internationally traded metal. More than 5 million tonnes of aluminium were shipped through the Strait of Hormuz in the previous year, destined for approximately 70 countries across Asia, Europe, and North America. The region also relies heavily on imported raw materials, producing only about 3% of global alumina and 1% of bauxite. Aluminium smelters typically hold three to four weeks of alumina inventories, meaning that prolonged shipping disruptions through the Strait of Hormuz would simultaneously choke both alumina inflows and aluminium exports.

Saudi Arabia's Ma'aden and the UAE's EGA explored the option of trucking material to alternative ports such as Red Sea terminals, but this alternative would be significantly more time-consuming and expensive, and would not resolve the challenge of ensuring continued raw material deliveries for smelting operations.

Iran itself has approximately 790,000 tonnes of annual aluminium smelting capacity. Between 50,000 and 80,000 tonnes of capacity had already been halted as a precautionary measure. However, Iran's direct impact on the international aluminium market is limited since much of its production is consumed domestically and international trade flows are restricted by sanctions.

Aluminium prices on the London Metal Exchange surged immediately. LME three-month aluminium reached $3,372 per tonne on March 5, setting a four-year high. Prices had already rallied as much as 3.8% to $3,315 per tonne on March 3 following QatarEnergy's announcement. The Rotterdam P1020A premium rose to $300-340 per tonne, while the European duty-paid premium jumped to $410-440 per tonne. The U.S. Midwest premium reached a record high of $1.06-1.08 per pound. Goldman Sachs estimated that a full month of lost production could push prices to $3,600 per tonne, while several analysts projected that prices could exceed $4,000 per tonne under a prolonged disruption scenario.

The market was already in a structural deficit before the conflict. ING Research had projected a global aluminium supply shortfall of approximately 600,000 tonnes for 2026, driven by China's capacity cap, trade dislocations, and the impending closure of the Mozal smelter in Mozambique. The Gulf crisis compounded these existing pressures, leaving the global market significantly exposed.

Europe is particularly vulnerable, with Middle Eastern producers accounting for approximately 30% of its aluminium imports. European billet premiums had already been rising due to the Carbon Border Adjustment Mechanism (CBAM) and the reversion of import duties to 6% on January 1, 2026. Market participants warned that prolonged disruptions would further exacerbate the structural deficit in European aluminium supply. The United States is also exposed, with Gulf producers supplying over 20% of U.S. aluminium imports.

Rio Tinto Group suspended negotiations with Japanese buyers over second-quarter aluminium supply, withdrawing a premium offer of $250 per tonne over LME prices, the highest since at least 2015. Activity in options markets surged, with traders placing significant bets on prices between $3,300 and $3,500 per tonne through April call options.

As of early March 2026, the situation remains highly dynamic. The duration and severity of the disruption depend entirely on the trajectory of the military conflict and the status of the Strait of Hormuz. If shipping routes remain impaired for more than four weeks, smelters relying on imported alumina could face forced production curtailments, amplifying the global supply deficit well beyond current projections.