Aluminium prices rallied above $3,500 per tonne on Thursday following unconfirmed reports of major disruptions at Gulf smelters, specifically Emirates Global Aluminium (EGA) and Aluminium Bahrain (Alba), according to ING analysts Ewa Manthey and Warren Patterson [1]. The reports indicate that EGA halted operations at its 1.6 mtpa Al Taweelah smelter after the site was allegedly hit by Iranian missiles and drones over the weekend, as cited by Wood Mackenzie [1]. In addition to Alba's reduced operations and earlier curtailments at Qatalum, these disruptions could remove approximately 3 million tonnes per annum (mtpa) of capacity from the market, which is nearly half of Middle East aluminium production [1].
ING estimates that if these halts and curtailments are confirmed, the aluminium deficit could deepen significantly. The severe disruption scenario would see a deficit of around 2-2.5 million tonnes, while even the base case now points to a deficit of roughly 1 million tonnes [1]. The supply situation is further exacerbated by capped Chinese output, constrained Indonesian ramp-up due to power limitations, and limited capacity growth elsewhere, keeping aluminium fundamentals strongly supportive despite potential demand destruction from weaker global growth [1].
Market reaction has been pronounced, with LME aluminium prices up approximately 17% year-to-date and the forward curve in steep backwardation, reflecting heightened supply concerns and bullish sentiment [1].
No forward-looking statements or analyst opinions regarding future price targets or recovery timelines were provided beyond ING's assessment of ongoing supply constraints and deficit risks [1].
CONCLUSION
The unconfirmed Gulf smelter disruptions have triggered a sharp rally in aluminium prices, intensifying supply deficit concerns and supporting bullish market sentiment. With constrained supply from China and Indonesia, fundamentals remain strong despite global growth worries. The market is likely to remain volatile as participants await confirmation of the reported outages and assess their lasting impact.