Aluminum Market Enters Deficit Due to Middle East Disruptions

Market Shift

to Deficit The aluminum market has moved into a deficit following escalations in the Middle East, according to a report from seekingalpha.

com. What began as disruptions to shipping and logistics has developed into a supply shock, with multiple Gulf smelters operating below capacity.

Regional Production Impact

The Middle East accounts for about 9% of global aluminum production but a larger portion of seaborne supply.

As a result, these disruptions affect market availability and pricing significantly.

Supply and Price Outlook Escalating

supply disruptions across Gulf smelters have created a deficit with limited near-term recovery, seekingalpha.

com reported. 9 million tonnes if disruptions continue, driven by curtailments affecting nearly half of the region's production. In a base case scenario, supply constraints are expected to ease gradually, with demand destruction and increased Chinese supply limiting further price increases; prices are projected to remain elevated but not rise materially higher.

Potential Risks

Key upside risks include persistent or intensified disruptions, which could lead to further smelter curtailments and alumina constraints, potentially pushing prices above $4,000 per tonne.

However, demand destruction may temper gains in the second half of the year.