Impact of U.S.-Israeli Attacks on Iran: Qatalum Aluminium Production Halted

The aluminium sector is experiencing significant disruptions following recent U.S.-Israeli attacks on Iran, leading to the shutdown of Qatari smelter Qatalum. Norsk Hydro, which holds a 50% stake in the joint venture, announced a force majeure to its customers after Qatalum's gas supplier indicated an impending suspension of gas supply. QatarEnergy, which owns the remaining 51% of Qatalum through Qatar Aluminum Manufacturing Co., had previously halted production of several downstream products, including aluminium, due to the same supply issues stemming from Iranian drone attacks. The shutdown of Qatalum, which has a production capacity of 648,000 metric tons per year, is expected to be completed by the end of March, with a full restart potentially taking six to twelve months.

Reuters

As a direct consequence of the production halt, aluminium prices on the London Metal Exchange rose by 2% to $3,259.50 per ton. Additionally, European aluminium premiums have surged, reaching $378 per ton for March and $428 for April, marking the highest levels in over three years. Despite Qatar accounting for less than 1% of the European Union's primary aluminium imports in 2025, the shutdown has raised concerns among traders about potential production stoppages in other Gulf Cooperation Council (GCC) countries, which supplied 8% of the world's aluminium last year.

Reuters

The GCC region is a significant producer and exporter of aluminium, relying on imports of bauxite and alumina to sustain its smelting operations. Morgan Stanley reported that the average monthly alumina imports for the GCC stand at 680,000 tons. However, only 61,000 tons of alumina are currently en route to the region's smelters. The ongoing geopolitical tensions have exacerbated supply chain vulnerabilities, particularly with shipping routes like the Strait of Hormuz facing restrictions.

Reuters

Critics have expressed concerns regarding the long-term implications of these supply disruptions on the aluminium market. The potential for further production halts in the region could lead to increased volatility in aluminium prices and supply shortages. The situation has prompted traders to remove nearly 10% of aluminium inventories from the London Metal Exchange's warehousing network, indicating a strategic move to capitalize on anticipated supply constraints.

Reuters

• “The decision to shut down was made after the company's gas supplier informed it of a forthcoming suspension of its gas supply,” — Norsk Hydro

Reuters

• “The region is both a significant producer and exporter of aluminium by sea and also relies on imports of bauxite and alumina to keep smelters running,” — Morgan Stanley

Reuters

The unfolding situation highlights the interconnectedness of geopolitical events and global commodity markets, particularly in the context of the aluminium industry.

Reuters