The global aluminum market is facing a convergence of geopolitical issues and persistent energy constraints. The result is the rally to multi-year highs that prompted analysts and investors to revise their price targets.

The latest disruption was not unexpected. Bahrain's Alba has initiated a partial shutdown of its operations amid ongoing shipping disruptions. According to Reuters, the company said it has begun a "controlled and safe shutdown" of about 19% of its total smelting capacity.

Alba, which operates the world's largest single-site aluminum smelter with an annual capacity of 1.62 million metric tons, said the move was designed to safeguard operations while the shipping bottleneck persists.

"This targeted, line-specific action is designed to optimize the utilization of Alba's existing raw materials inventory and prioritize operational stability across Reduction Lines 4, 5, and 6," the company said.

Since the shipping through the Strait of Hormuz has stopped, the smelter is unable to either import key inputs or export the material.

Alba added that the downtime would be used to conduct asset care and maintenance across the affected lines. Housekeeping, cleaning, and preparation work will ensure a safe restart once conditions stabilize.

Multi-Year Highs

These disruptions have helped push aluminum prices sharply higher. On the London Metal Exchange, aluminum surged over $3,540 per metric ton last week. It is the highest price it has reached in nearly 4 years, reflecting concerns about disruption.

Aluminum prices year-to-date ($ per ton), Source: LME

Elsewhere in the Gulf, energy supply has emerged as another constraint. Qatar's Qatalum smelter has reduced output to around 60% of capacity after a suspension of gas supplies forced the company to begin a partial shutdown earlier this month.

The Middle East accounts for roughly 9% of global aluminum production. Its disruption is yet another signal regarding the fragility of the global market. At the same time, China's self-imposed cap on aluminum capacity (currently set at 45.5 million tons) limits its ability to offset the issue.

Converging Factors

The United States, which consumes around 3% of global output, has seen its production capacity steadily decline over the past decade. High energy costs and external competition forced multiple smelters to close. Producing capacity fell to around a third of domestic needs, leaving the domestic market dependent on imports. 

Power demand from AI-driven data centers leaves the energy-intensive aluminum industry unable to compete and restrains attempts at domestic revival.

Energy constraints are affecting producers even far from AI-driven demand centers. Per Reuters,  Australia's South32 Ltd. ( SHTLF ) said it would place its Mozal aluminum smelter in Mozambique on care and maintenance after failing to secure affordable power beyond March 2026. The facility accounts for around 29% of South32's ( SHTLF ) aluminum production, which amounted to 1,211 kt in 2025.

The tightening market is improving sentiment toward producers such as Alcoa Corporation ( AA ) . JPMorgan upgraded the stock to "neutral" from "underweight," raising the price forecast to $68. UBS raised its forecast to $70 from $48, citing stronger aluminum prices and tighter supply fundamentals.

Alcoa ( AA ) closed last week at $63.59. The stock is up 12.47% year-to-date.

AA Price Action: Alcoa ( AA ) shares were up 1.18% at $64.34 during premarket trading on Monday. The stock is approaching its 52-week high of $68.40, according to Benzinga Pro data.