Iran Attacks Shift Aluminum Market Outlook
Iran Attacks Disrupt Aluminium Market
Iran's recent attacks on Gulf sites, including Emirates International Aluminium (EGA) and Bahrain Aluminium (Alba) on March 28th, have had a significant effect on the aluminum market. Consequently, Goldman Sachs has raised its London Metal Market (LME) aluminum price projection for the next quarter of 2026 from $3,200 to $3,450 per metric ton. This adjustment is attributed to the ongoing inventory deficiency caused by the closure of the Strait of Hormuz. The damage to smelters has increased market vulnerability, indicating the beginning of a new phase of fluctuations in the aluminum industry.
Iran's recent attacks on Gulf sites, including Emirates International Aluminium (EGA) and Bahrain Aluminium (Alba) on March 28th, have had a significant effect on the aluminum market. Consequently, Goldman Sachs has raised its London Metal Market (LME) aluminum price projection for the next quarter of 2026 from $3,200 to $3,450 per metric ton. This adjustment is attributed to the ongoing inventory deficiency caused by the closure of the Strait of Hormuz. The damage to smelters has increased market vulnerability, indicating the beginning of a new phase of fluctuations in the aluminum industry.
Goldman Sachs Revises Price Forecasts
Goldman Sachs has revised its cost estimates, raising the average for 2026 to USD 3,200 per tonne from USD 3,100, and the forecast for 2027 to USD 2,750 per tonne from USD 2,700. Regrettably, recent drone and rocket attacks by Iran on two major Gulf smelters have disrupted earlier signs of market recovery, leading to renewed industry concerns about a deepening supply crisis.
Prices Surge Amid Supply Disruptions
In early April 2026, aluminium prices surged to between USD 3,400 and USD 3,500 per tonne, reaching four-year highs. This increase was driven by Iranian attacks on Middle Eastern smelters and the shutdown of the Strait of Hormuz. Disruptions in major producing countries such as Bahrain and the UAE have put approximately 9% of global production at risk, contributing to a 33% year-to-date price increase. Analysts suggest prices could rise further, potentially reaching USD 4,000 per tonne.
Damage to Key Smelting Facilities
Significant damage was reported at EGA’s Al Taweelah facility, which has an annual production capacity of 1.5 million tonnes, and Alba’s plant, which produces 1.6 million tonnes annually. These disruptions have driven LME aluminium prices close to four-year highs.
Record-Breaking LME Prices
During the March 31 trading session, LME aluminium closed with a cash offer price of USD 3,585 per tonne. This surpassed the previous record set on March 12, when the three-month benchmark exceeded USD 3,500 per tonne.
Market Uncertainty and Supply Adjustments
Goldman Sachs stated that “the impact on the global aluminium market remains highly uncertain.” In response, the bank has removed 1.1 million tonnes of primary aluminium production from its 2026 supply balance.
Shift from Surplus to Deficit
Revising its outlook, Goldman Sachs now projects a 570,000-tonne deficit in the global primary aluminium market in 2026. This marks a significant shift from its earlier estimate of a 550,000-tonne surplus.
Upside Risks to Price Forecasts
The bank also noted that risks to its 2026 average price forecast remain skewed to the upside. This is particularly true if the extent of damage exceeds expectations or if additional supply disruptions occur due to strikes, or shortages in raw materials or gas.