ING’s Commodities Strategist Ewa Manthey highlights that recent output cuts at Alba and Qatalum tighten the Aluminium supply outlook, with Gulf disruptions now affecting a notable share of regional production. ING has revised its Aluminium scenarios to align with its latest Oil market framework, slightly tightening market balance assumptions and flagging higher probabilities of prolonged disruption if shipping issues through the Strait of Hormuz persist.

Gulf disruptions lift supply risk

"Aluminium Bahrain (Alba) has initiated a phased shutdown of reduction lines 1-3, representing around 19% of its 1.6Mt annual capacity. Meanwhile, Qatalum is currently operating at roughly 60% of capacity."

"Aluminium smelters in the Gulf rely on continuous imports of raw materials such as alumina and typically hold around three to four weeks of inventories. This limited buffer leaves production vulnerable to shipping disruptions, particularly as alumina cannot be stored for extended periods. The region produces only around 3% of global alumina and about 1% of bauxite, leaving smelters highly dependent on seaborne supply."

"With the conflict now entering its third week, a large portion of this buffer may already have been drawn down. If shipping disruptions through the Strait of Hormuz persist, additional curtailments could begin within the next one to two weeks as inventories are depleted."

"In our recent report, we highlighted how exposed aluminium markets are to disruptions in the Gulf and warned that an escalating conflict in the Middle East could push prices above $4,000/t under a severe disruption scenario. Even before the conflict, we were already constructive on aluminium prices, supported by China approaching its capacity ceiling, trade dislocations and the imminent shutdown of South 32’s Mozal already tightening supply."

"Under our base case scenario, shipping disruptions remain severe in March before gradually easing through the second quarter. In this case, current curtailments at Alba and Qatalum would remain relatively contained."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)