China's Aluminum Exports Set to Increase Due to Ongoing Persian Gulf Supply Disruptions

The disruption of aluminum supply from the Persian Gulf significantly impacts global markets, pushing buyers toward China as an alternative source.

• China's aluminum exports are set to increase as the ongoing Iran conflict disrupts production in the Persian Gulf.
• Key Gulf facilities have halted operations due to Iranian attacks, affecting 9% of global aluminum output.
• International aluminum prices are rising, with the London Metal Exchange (LME) reporting a price of $3,620 per metric ton.

• The Iran war began on February 28, 2026, when U.S. and Israeli forces targeted Iranian military sites, leading to retaliatory actions that closed the Strait of Hormuz.
• Iran's military actions have severely impacted Gulf aluminum producers, including Emirates Global Aluminium and Aluminium Bahrain, which are now facing production halts.
• China, with record-high local inventories, is positioned to fill the gap left by disrupted Gulf supplies, benefiting from elevated international prices.

The ongoing conflict in the Persian Gulf has created a significant supply chain disruption for aluminum, a critical commodity in various industries, including construction and manufacturing. The crisis began with U.S. and Israeli airstrikes on Iranian military targets, which prompted Iran to retaliate by closing the Strait of Hormuz. This strategic waterway is crucial for global trade, as it handles approximately 25% of the world's seaborne oil and commodities, including aluminum.

As a result of the conflict, major aluminum production facilities in the Gulf, such as Emirates Global Aluminium's Al Taweelah smelter and Aluminium Bahrain, have been severely damaged. The Al Taweelah facility alone has an annual capacity of 1.6 million tonnes and has declared force majeure, indicating that it cannot fulfill its contractual obligations due to unforeseen circumstances. This disruption has led to a significant reduction in aluminum output from the region, which now accounts for 9% of global production.

In contrast, China, the world's largest aluminum producer, is experiencing a surge in exports. With domestic inventories at record highs and international prices rising, Chinese suppliers are well-positioned to meet the demand from global buyers seeking alternatives to Gulf aluminum. In March 2026, China reported aluminum exports of 485,000 tonnes, a 13% increase from February, indicating a robust response to the supply gap created by the conflict.

The implications of this shift are profound. As global buyers pivot to China for aluminum supplies, the dynamics of pricing and availability will change. The LME prices have already climbed to $3,620 per metric ton, reflecting the heightened demand and reduced supply from the Gulf. This situation not only benefits Chinese producers but also places upward pressure on prices for aluminum-dependent goods worldwide, including construction materials, beverage cans, and vehicles.

• Construction companies: Facing higher costs for aluminum materials, impacting project budgets and timelines.
• Manufacturers: Experiencing supply chain disruptions and increased prices for aluminum components.
• Consumers: Likely to see rising prices for aluminum-based products, such as vehicles and packaging.
• Investors: Those with stakes in aluminum markets may benefit from rising prices and increased demand for Chinese exports.

• Aluminum price trends: Monitor LME prices for indications of ongoing supply-demand imbalances.
• Production recovery timelines: Watch for updates on the restoration of Gulf aluminum production and the potential return of supply to the market.
• Chinese export volumes: Keep an eye on China's aluminum export figures to gauge how long the surge in demand will last.