The force majeure declarations by Qatalum and Alba could remove over 2.2 million tonnes of primary aluminium from global circulation, representing a significant portion of theworld primary production, with cascading implications for downstream and aluminium-dependent industries
Both disruptions stem directly from the US-Israel-Iran conflict:
- Qatalum shutdown: On March 4, Qatar Energy informed the smelter of an imminent gas supply halt due to conflict-related infrastructure pressure, triggering a controlled shutdown initiated that same day. Norsk Hydro, the smelter’s co-owner, issued force majeure notices to customers simultaneously. Qatalum reported that a full restart could require six to twelve months.
- Alba force majeure: Shipping blockage through the Strait of Hormuz has halted all outbound metal shipments, though the smelter’s production operations remain active. Alba clarified that the force majeure relates solely to shipment delays.
Dual Supply Chain Vulnerability
The disruption extends beyond finished metal exports. Gulf smelters lack self-sufficiency in raw materials: the UAE imports approximately 100% of its bauxite and alumina by sea through the Strait, as does Qatar’s Qatalum. With both outbound shipments and inbound raw material flows blocked simultaneously, smelters face accelerated depletion of alumina stockpiles, which typically sustain only 3–4 weeks of operation.
In this situation, smelters must choose between sourcing emergency alumina at distressed prices, curtailing production, or shutting down entirely. Producers have the option to truck material to alternative ports, though this entails significant time and cost.
Critical Risk: EGA and Maaden Status
Emirates Global Aluminum (EGA), which operates smelter capacity in Dubai and Abu Dhabi, has not yet declared force majeure yet. Maaden (Saudi Arabian Mining Company), operating a primary smelter at Ras Al-Khair, similarly has not declared force majeure.
If EGA and Maaden join Alba and Qatalum in shutting down or halting shipments, the supply disruption would escalate from significant to “structurally severe,” according to analysts, covering 12-15% of the global primary aluminium capacity.
Immediate Market Impacts
Price surge: The LME three-month aluminium contract already rose 5.1% to $3,418 per tonne on the day Alba’s halt was announced. Analysts project prices could climb as high as $4,000 per tonne if the disruption persists;
Pre-existing shortage: The aluminium market was already experiencing strain before the disruptions; supply was not in balance. The force majeure has shifted the narrative from geopolitical risk to realised supply disruption.
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Market Structure Consequences
Secondary aluminium demand surge: Buyers will seek recycled aluminium and scrap as substitutes, inflating secondary market prices and accelerating collection and remelting activity.
Downstream cost pressure: Automotive, aerospace, packaging, and construction sectors face significantly higher input costs, creating potential margin squeeze unless they pass through price increases to end customers.
Contractual disputes: While force majeure may relieve some obligations, disputes over notice periods, disruption duration, and mitigation requirements are likely to emerge.
Stockpiling and logistics strain: Companies are stockpiling metal while seeking alternative shipping routes. Stockpiling downstream will further tighten the market.
Material substitution: If market tightness persists beyond weeks, OEMs and end users may substitute aluminium with alternative materials where technically feasible.
Hedging and risk management: Price volatility and supply uncertainty are driving increased demand for financial hedges, product and contract hedges, and long-term offtake agreements at premium prices to secure metal availability.
Regional premium expansion: European aluminium premiums have reached record levels; US premiums have spiked substantially, reflecting the geographic imbalance between supply and demand and the regional trade regulations impacting aluminium.
