Will Iran’s strikes on Gulf smelters strengthen China’s aluminium trade?

A drone view shows an employee working on the production line of aluminium products at a factory in Huaibei, Anhui province, China, on February 11, 2025.

Photo: Reuters The world is bracing for an aluminium supply shock after two major Middle Eastern smelters were damaged in Iranian attacks over the weekend, a disruption likely to push more production to China in the near term and potentially for years to come, analysts said.

Emirates Global Aluminium (EGA), a leading regional producer, reported “significant damage” at its Abu Dhabi site following strikes by Iranian missiles and drones, while Aluminium Bahrain said it was assessing the extent of damage at its facility, where two employees were injured.

Iran’s Islamic Revolutionary Guard Corps (IRGC) said it targeted the two facilities on Saturday in retaliation for attacks on two Iranian steel plants, claiming they had ties to US military and aeronautics firms.

The two smelters account for a combined 3.9 per cent of global aluminium production capacity, according to a Monday research note issued by China International Capital Corporation (CICC). “The affected capacity represents a significant share, and any shutdown could lead to a pronounced supply-side contraction in the short term,” the note’s authors said, adding the impact could be long-lasting as “severe damage to production capacity might take years to restore”.

Safety concerns could further curb output in the Middle East, as aluminium smelting requires extremely high levels of operational continuity.

Attacks increase the risk of unplanned shutdowns, power outages and disruptions to raw material supplies, raising the likelihood of plant closures or reduced operations, the note’s authors said.

Compounding the risks, the IRGC announced on Friday that the Strait of Hormuz is closed to all vessels not explicitly granted permission by Tehran, a move that could disrupt shipments of both raw materials and finished aluminium products.

The CICC note also highlighted growing pressure on European smelters from higher energy costs.

About 60 per cent of the continent’s electricity prices are tied to natural gas, which have surged by 80 per cent since the United States and Israel launched the war on Iran on February 28.

Data from the US Geological Survey (USGS) showed that China produced 45 million tonnes of aluminium last year, accounting for 60.8 per cent of the global total.

The Middle East accounted for 9 per cent, Goldman Sachs said in a report re

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