The Iran war is impacting aluminum, too

Aluminum ingots at Emirates Global Aluminium in Abu Dhabi. Bloomberg Creative/Getty Images

Over the weekend, Iran’s Islamic Revolutionary Guard Corps said it intentionally attacked two aluminum producers in US-allied nations in the region in response to earlier attacks on two Iranian steel plants. The development underscores concerns that the conflict could drive prices of the metal higher. What happened On Saturday, the top producer in the region, Emirates Global Aluminum, said an Iranian drone and missile attack caused “significant damage” to its production plant in Abu Dhabi. The company said several employees were injured, but not fatally. That same day, an Iranian attack hit Aluminum Bahrain (known as Alba). The company, home to the world’s largest aluminum smelter (a high-energy industrial apparatus), said in a statement yesterday that it’s still assessing the damage. Earlier this month, Alba said it temporarily suspended 19% of its production capacity due to being unable to get supply through the Strait of Hormuz. Another element to consider Aluminum is the most abundant metal on the planet, but it requires large amounts of energy to extract and process, making it susceptible to natural gas shipping problems in the Strait of Hormuz: Under normal conditions, the Middle East is responsible for producing about 9% of the global aluminum supply. A plant in Qatar, jointly owned by QatarEnergy and Norwegian company Norsk Hydro, scaled its aluminum production back to about 60% capacity because it had trouble getting the gas it needed to extract the metal, according to the WSJ. It’s not just the Middle East: Hindalco Industries in India, which provides aluminum to auto manufacturers, notified customers it would invoke force majeure clauses in its contracts to avoid fulfilling orders. Anonymous sources told Bloomberg it was due to issues stemming from the Iran war, including disruptions to gas supplies. That issue can ripple to smelters around the world as the conflict continues. Big picture: Aluminum prices were rising in the US before the war started because of President Trump’s 50% tariffs on the metal. The US gets most of its aluminum from other countries, and domestic production has been dropping for years. According to the London Metal Exchange benchmark, prices of aluminum (pronounced the British way) are up about 4% since the war started on February 28