Aluminum Rallies as Qatar Halts Output on Intensifying Iran War

Core Viewpoint - The aluminum market is experiencing a significant surge in prices due to production halts and force majeure declarations from major producers in the Middle East, driven by the ongoing conflict in the region [1][4]. Group 1: Production and Supply Disruptions - Qatalum, a joint venture between Qatar's state-owned aluminum producer and Norsk Hydro ASA, has initiated a controlled shutdown of its production, with a full restart potentially taking six to twelve months [2]. - QatarEnergy has halted aluminum and chemical production due to the impact of Iranian attacks, leading to the shutdown of a major liquefied natural gas plant [4]. - The conflict has caused significant disruptions in the region, with Qatar and Iraq also halting production at major energy sites [5]. Group 2: Market Reactions and Price Movements - Aluminum prices surged by as much as 3.8%, with the London Metal Exchange price settling at $3,251 per metric ton, reflecting heightened concerns over supply disruptions [4]. - Orders to withdraw aluminum from warehouses tracked by the London Metal Exchange more than doubled to 86,025 tons, indicating traders' anticipation of widespread supply issues [6]. - The US Midwest premium, a key benchmark for American manufacturers, rose by 1.4% to $1.055 per pound, nearing the mid-February record [8]. Group 3: Regional Impact and Strategic Responses - Emirates Global Aluminum, the UAE's leading producer, acknowledged delays in exports and may rely on stockpiles outside the region to fulfill customer demands [7]. - Rio Tinto Group has withdrawn an initial supply offer to Japanese customers for the second quarter, citing increased regional fees due to the ongoing hostilities [7]. - Goldman Sachs Group Inc. anticipates "substantial upside" to premiums in Europe, which have reached their highest levels since 2022, indicating a strong market response to the supply constraints [8].