On August 12th, the leading aluminum production company in the Middle East, Emirates Global Aluminum (EGA), announced its resumption plan, planning to invest about $400 million to repair a conflict damaged aluminum smelting facility in Abu Dhabi and promote the return of production capacity to normal levels.

According to a statement released by the company, this smelter aims to restore production to pre war levels in the first quarter of next year, and related resumption work is being accelerated. There has been significant progress in the restart of production capacity, with about 18% of the electrolytic cells in the current factory area resuming operation. Compared to the 7% start-up scale in early July, the pace of restart continues to accelerate.

This round of production capacity disturbance originated from the damage to smelter facilities. Previously, due to the impact of the event, EGA announced the triggering of force majeure and suspended the delivery of some orders, which had a short-term impact on the regional aluminum supply chain. It is worth noting that although the production end is restricted, the company has not completely stopped exporting, and continues to carry out aluminum product exports through logistics routes that bypass the Strait of Hormuz, which to some extent alleviates the expectation of tight global spot aluminum supply.

From the perspective of the global aluminum market, as a core aluminum producer in the Middle East, EGA’s capacity recovery progress has long been a concern of the industry chain. In the short term, electrolytic cells will gradually restart, with a gentle pace of incremental release, and will not release a large amount of aluminum ingots to the market at once; In the medium to long term, once the production capacity fully returns to pre war levels in the first quarter of next year, it will increase the global supply of primary aluminum and regulate the overseas aluminum supply pattern.

At the same time, there is still uncertainty in the geopolitical situation. Subsequent changes in logistics transportation costs, regional shipping risks, and equipment repair progress may all disrupt the established resumption plan. The domestic aluminum market also needs to continuously track the transmission effect of overseas supply increment, and comprehensively judge the market trend based on domestic energy consumption policies, downstream profiles, packaging, and the actual demand of the automotive industry.