Security
Disruptions in the Middle East, including missile attacks on the Emirates Global Aluminium (EGA) and Aluminium Bahrain (Alba) smelters on March 30 and the closure of the Strait of Hormuz, exposed the European aluminium market’s reliance on imported metal and highlighted vulnerabilities in regional supply chains.
The disruption pushed the European duty-paid P1020 premium to its highest level since 2022 and billet premiums to more than double their February levels.
Fastmarkets assessed the aluminium 6063 extrusion billet premium, ddp Italy (Brescia region) at $1,100.00-1,150.00 per tonne on Friday August 21, down 10% from a high of $1,200.00-1,300.00 per tonne on June 5.
Fastmarkets assessed the aluminium P1020A premium, in-whs dp Rotterdam at $460.00-500.00 per tonne on Tuesday August 25, down 18.3% from 2026 highs of $575-600 per tonne on April 2.
Premiums have since eased from their peak, with market participants reporting higher volumes of Canadian material entering Europe as elevated premiums and US tariffs reshaped trade flows.
Fastmarkets assessed the aluminium P1020A premium, ddp Midwest US at 111.00-113.00 cents per lb on Wednesday August 26, narrowed from 110.00-113.00 cents per lb on Wednesday the previous week.
Additional Chinese exports also helped fill supply gaps created by the disruption, with exports rising by 10.4% year on year in May.
“It is clear that material can be redirected quickly,” said Andy Farida, senior analyst at Fastmarkets. “When one supplier is unable to deliver, competitors naturally step in to fill the gap, and high premiums provide that incentive,” he added.
However, there is increasing focus on securing aluminium supply chain security in Europe, supported by the EU’s “Made in Europe” agenda, and policy initiatives such as the Industrial Accelerator Act aiming to boost regional sourcing of strategic materials.
Domestic European aluminium production has also increased in recent months following the restart of Nordural Century Aluminium’s smelter in Iceland, Alcoa’s San Ciprián smelter in Spain and Hydro’s Slovalco smelter in Slovakia.
Meanwhile, industry groups continue to call for stronger trade protections in Europe.
European Aluminium has called for stronger measures against Russian material entering the bloc through third countries, arguing that indirect imports continue to distort competition in the European market.
Despite this, market participants continued to closely monitor supply from Gulf producers, with Middle Eastern material accounting for around 20% of Europe’s aluminium imports before the conflict.
EGA announced on August 26 that around 25% of capacity at its Al Taweelah smelter had been restarted, while Alba reported improving operating rates after feedstock shortages constrained production.
Qatalum has continued to operate at around 60% capacity since March following the disruption, whereas Saudi Arabian Mining Company Ma’aden reported largely unchanged aluminium production.
“The key question is when Middle Eastern producers will return to full production,” Farida said, noting that market participants expect producers to seek to regain market share and recover volumes lost during the disruptions.
Fastmarkets analyst Andy Farida will be speaking at the Fastmarkets International Aluminium Conference in Budapest, Hungary, on September 15-17.
Energy
Access to reliable and affordable energy remains a key factor shaping aluminium production.
Concerns over energy security have increased following continued disruption in the Middle East and uncertainty around the Strait of Hormuz, a shipping route that carries around 20% of global oil and liquefied natural gas.
Iran and Oman have agreed a temporary shipping corridor, but the Strait is not expected to fully reopen until the US fulfills its commitments under the interim peace agreement signed in June, according to media reports.
Despite ongoing energy security concerns, Alcoa’s San Ciprián smelter in Spain has returned to full production, while Hydro has restarted its Slovalco smelter in Slovakia after both were previously curtailed due to high power costs.
On August 24, Hydro announced a power purchase agreement with Statkraft, Europe’s largest generator of renewable energy, for 876 GWh of annual electricity supply between 2031 and 2040.
Hydro had signed two previous agreements with Statkraft in April 2026 covering 0.9 TWh per year in 2029-30 and 1.3 TWh per year from 2031 to 2038.
Globally, new aluminium investment is increasingly being directed toward regions with access to reliable and competitively priced energy.
Indonesia has emerged as a key destination for new smelting capacity, with smelting capacity expected to reach 1.5-1.8 million tonnes per year by the end of 2026 according to Fastmarkets analysts.
Among the projects under development is PT Hua Chin Aluminium Indonesia, a joint venture (JV) between Tsingshan Holding Group and Huafon Group. Its Morowali Industrial Park-based smelter has annual capacity of 480,000 tonnes and has applied to have its high-grade aluminium brand approved for delivery on the London Metal Exchange.
Tsingshan is also considering an 800,000-tonnes-per-year smelter at the Weda Bay Industrial Park in North Maluku, with commodities trader Mercuria reportedly holding a 25% stake in the project.
Carbon
While disruptions to Middle Eastern supply have affected overall aluminium availability, the impact on low-carbon supply has been more limited.
Gulf producers generally have lower emissions than coal-powered smelters, although their carbon footprint is typically higher than that of hydro-powered producers.
Low-carbon aluminium supply into Europe has remained relatively well supplied, with Canadian material increasingly flowing into the region following changes to US trade policy and bringing additional duty-paid low-carbon units into the market.
By contrast, the duty-unpaid low-carbon market remains considerably tighter. Market participants continued to report limited availability and low liquidity, reflecting the market’s greater reliance on material from the Middle East.
Concerns over low-carbon supply intensified earlier this year when South32’s Mozal smelter in Mozambique was put on care and maintenance, a key supplier of low-carbon P1020A aluminium. However, the restart of Nordural Century Aluminium’s smelter in Iceland has helped ease some of those concerns.
Alba’s acquisition of Aluminium Dunkerque highlights continued investment in low-carbon aluminium production capacity.
Carbon footprints have come under greater scrutiny following the introduction of the European Union’s Carbon Border Adjustment Mechanism (CBAM) on January 1, 2026.
Market participants continue to await verified emissions data, which is expected to be published in 2027, having relied on default emissions values during the first year of CBAM implementation.
However, sources have noted that CBAM has become less of an immediate focus in recent months, with attention shifting toward supply security and disruption in the Middle East.
One producer noted that “the lower premiums go, the more important CBAM will become,” adding that elevated premium levels have largely offset the impact of CBAM costs.
Another source said that, while CBAM may have increased discussion around emissions, it has not materially changed end-user attitudes.
“It has made people talk more about emissions, but it doesn’t seem to have made end-users any more concerned about low-carbon material. If we pay CBAM, that effectively equalizes metal from different origins,” the source said.
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