Traders around the world had to deal with another crisis when, in retaliation for continued attacks by the U.S. and Israel, Iran attacked two aluminum product sites in the Middle East, disrupting the global aluminum supply chains. The Middle East accounts for 9% of the global aluminum smelting capacity. Supply was already disrupted in the Persian Gulf due to the closure of the Strait of Hormuz. A direct attack on the production sites themselves has worsened the matter, causing aluminum futures to surge.
Before the war, the aluminum market was operating at a surplus supply of 200,000 tons. This could turn into a deficit of 1.3 million tons due to the disruption at the Al-Taweelah production facility alone, which produced 1.6 million tons of the metal last year. An aluminum price surge is on the cards, and Alcoa stock (AA) is reacting accordingly.
