As geopolitical tensions in the Middle East escalate further, the conflict is no longer confined to the energy sector but is beginning to permeate basic industrial manufacturing segments. On March 28, two major aluminum production facilities in the United Arab Emirates and Bahrain were successively targeted by missile and drone strikes, sharply increasing the risk of a rupture in the global aluminum supply chain. This event marks a qualitative shift in the nature of the conflict, transitioning from previous market concerns regarding logistical bottlenecks to the physical destruction of core production capabilities.
The most severe damage occurred at the Emirates Global Aluminium Tavira production base located in the Khalifa Economic Zone, Abu Dhabi. It is one of the largest metal production facilities in the Middle East, with a 2025 plan to produce approximately 1.6 million tons of casting aluminum. The other involved enterprise is Bahrain Aluminium Company, whose factory suffered minor personnel injuries during the attack. The combined capacity of these two enterprises accounts for over 6% of the global total, with EGA alone contributing about 4% of global supply, meaning one in every twenty-five tons of aluminum worldwide originates from this region. Following the attack, multiple employees were injured. While companies are attempting to utilize overseas marine inventories to maintain customer deliveries, they have not explicitly disclosed whether production has been completely suspended.
Markets reacted swiftly and violently. Before high premiums appeared in international spot aluminum prices, LME aluminum inventory had already fallen to levels unseen in nearly a decade. As of March 27, European aluminum ingot spot prices rose by over 30% compared to the end of the previous month, with single-day gains briefly exceeding $500 per ton. Notably, while capital market focus was previously concentrated on rising logistics costs due to Red Sea shipping disruptions, this attack directly transmitted risks to the supply side. The substantial reduction in volume has impacted market psychology far more significantly than in the past.
The Islamic Revolutionary Guard Corps of Iran issued a statement the following day claiming responsibility for the attack, describing it as a deadlier strike against facilities related to the US military and aerospace industries, and warned that retaliatory responses would no longer be limited to symmetric counterattacks. Meanwhile, Bahrain Aluminium had previously declared force majeure due to cargo unable to pass through the Strait of Hormuz, cutting production by approximately 20%. Norsk Hydro’s electrolytic aluminum plant in Qatar also reduced output. These multiple factors compounded to exacerbate supply anxieties.
Regarding subsequent impacts, analysts point out that physical attacks on core smelting facilities have significant long-tail effects. Even if regional tensions ease in the future, full resumption of aluminum plants will not be easy; equipment maintenance, safety assessments, and capacity ramp-up often require cycles of six months to over a year. Currently, over 40% of Middle Eastern electrolytic aluminum exports flow to the European Union, serving as a critical force filling the gap left by Russian aluminum exports. With local production halted and transportation channels blocked creating an effective supply gap, overseas spot premiums are expected to continue rising, bringing additional inflationary pressure to the global economy.
