Middle East Aluminum Plant Production Cuts Trigger Supply Chain Disruptions, Alcoa (AA.US) Reaps "Fisherman's Gains" with Surging Orders

CITIC Finance APP learned that the largest aluminum producer in the United States, Alcoa Corporation (AA.US), stated that due to reduced production at aluminum plants in the Middle East, many buyers are seeking alternative supplies, and the company has received a large number of purchase intentions.

Chief Financial Officer Molly Beerman said at a JPMorgan meeting on Tuesday, “We are indeed seeing an increase in customer orders, and inquiries for the second quarter and the second half of the year are also rising. Some of these customers, or even most of their aluminum supply, originally came from Middle Eastern smelters. Therefore, we are currently receiving additional spot orders, which will benefit the company in the second half of this year.”

Against the backdrop of actual shipping disruptions in the Strait of Hormuz, aluminum buyers are actively seeking alternative sources. The Gulf countries’ aluminum production accounts for about 9% of the global total, and local smelters have gradually reduced production last week and over the weekend to save raw materials.

Beerman revealed that Alcoa, also a major producer of alumina, ships about 4 million tons of this raw material annually to the Middle East for its smelters. After the closure of the Strait of Hormuz, “this batch of raw materials originally destined for the Middle East is shifting to other markets, most likely to China.”

Earlier, due to attacks by the US and Israel on Iran, aluminum prices surged to their highest level since 2022 last week, then retreated. The Midwest premium in the US—an additional premium over the benchmark price when delivering aluminum to the region—rose to $1.10 per pound last week, hitting a record high.