As we reflect on the Middle East crisis that commenced on February 28, 2026, and stretched into the second half of the year, it brings to mind the dramatic rise and fall of the London Metal Exchange (LME) aluminium price that reached four-year highs before cooling down. The skyrocketing prices result from the declining inventory levels of the LME aluminium stocks, thereby reporting a month-on-month decline from 498,670 tonnes in January to 320,314 tonnes in June.
How has the LME aluminium inventory scenario fared across the January-June period? Here is the six-month cumulative year-on-year comparison among 2026, 2025 and 2024:
A total volume shed saw 178,356 tonnes leaving exchange warehouses over this timeframe, with an average monthly volume loss of 35,671 tonnes per month.
H1 2026’s sharp decline can be directly attributed to the market volatility caused by the Middle East conflict among the US, Israel and Iran, affecting the Gulf region, which accounts for 9 per cent of the global share of primary aluminium production capacity.
Complicated shipping through the region, affecting both the import of alumina and the export of finished aluminium. Gulf smelters depend on uninterrupted alumina imports to sustain production, with the disruption limiting the movement of finished aluminium to international markets.
Thus, the shipping disruptions due to the closure of the Strait of Hormuz brought the LME aluminium inventory under pressure, compelling Aluminium Bahrain (Alba) to invoke force majeure on certain products from early March. Soon after, a controlled shutdown of Alba’s potlines 1, 2 and 3 cut 19 per cent or 308,369 tonnes of Alba’s 1.62 million-tonne production capacity.
The situation was compounded by the controlled shutdown of Qatar’s Qatalum smelter from March 3, to be reopened 10 days later (QAMCO), which will continue manufacturing at around 60 per cent of its total capacity of about 640,000 tonnes, thereby cutting off approximately 256,000 tonnes.
On March 28, Iran launched drone and missile attacks on the facilities of Emirates Global Aluminium (EGA) and Alba, leading to “significant damage” sustained by the EGA plant, with Alba assessing the intensity of the damage caused.