On Friday, July 24th, the major European aluminum producer NorskHydro stated that if the shipping restrictions in the Strait of Hormuz persist, the global aluminum market supply gap will widen.
Eivind Kallevik, the CEO of Hydro, said in an interview that since the US and Iran resumed hostile actions, the shipping conditions in this crucial waterway have deteriorated, hindering the import of raw materials and the export of metals in the Persian Gulf region.
Kallevik stated that the war in Iran has forced the smelters in the Middle East, which account for nearly one-tenth of the global aluminum production, to seek alternative logistics routes. Meanwhile, producers in other regions are increasing their output. However, he noted that if this situation persists, it could lead to...
The prolonged situation will result in a market supply gap exceeding the company's current estimate of 900,000 tons. "The situation is clearly deteriorating rapidly. The longer the situation persists in the Gulf region, the more severe the global market supply shortage will naturally become," Kallevik said.
The conflicts in the Middle East have disrupted the aluminum market, but the significant restructuring of global supply chains has helped mitigate some of the impact. Surprising increases in supply from China and Indonesia, along with efforts by other producers including Norsk Hydro to boost output, have helped alleviate the situation.
Kallevik stated that since the conflict began, European manufacturers have also been depleting their inventories, which has helped to alleviate the absolute shortage impact in the region's market to date.
Kallevik pointed out: "At the beginning of the year, the inventory levels at many ports were sufficient. Before the new carbon tax was imposed on aluminum imports, the volume of incoming goods increased. The tough test for the remainder of 2026 lies in how much cargo we can obtain to replenish these inventories."
Despite facing supply chain challenges, Hydro's recycled aluminum business output increased by 15% in the second quarter, reaching approximately 225,000 tons, and its profitability improved accordingly. The group's adjusted overall earnings before interest and taxes rose by 15% year-on-year to 892 million kroner (equivalent to 929 million US dollars), exceeding analysts' expectations.
As the conflicts in the Middle East escalated, the price of aluminium on the London Metal Exchange (LME) rose this month. Previously, it had dropped significantly in June when the situation eased.
