Aluminum shortage threatens automotive manufacturing
The crisis in the Middle East is putting aluminum supplies at risk, creating new challenges for the automotive industry. Modern vehicles contain aluminum equivalent to roughly 15% of their total weight, making the metal essential for reducing vehicle mass and improving fuel efficiency and electric driving range. Aluminum is widely used in vehicle frames, engine components, and wheel rims.
Aluminum prices continue to rise
According to the latest projections from Japanese newspaper Nikkei, industrial disruptions linked to aluminum deliveries are expected to persist through at least 2027 and 2028. The publication notes that the escalation of the conflict following U.S. and Israeli attacks on Iran in late February pushed aluminum prices on the London Metal Exchange (LME) to $3,600 per metric ton, up from approximately $3,200 before the conflict.
The first consequence is the sharp increase in costs. The second is growing concern over material availability. Direct attacks on smelters in the United Arab Emirates and Bahrain have intensified supply risks across global metal markets.
“Attacks on EGA’s Al Taweelah smelter and Alba have led us to forecast a market deficit of up to 3 million tons in 2026, with global production declining by 3% year over year. A recovery toward near-full production capacity will be slow,” according to research from Wood Mackenzie.
Conditions are expected to improve somewhat in 2027, but the market is still projected to face a significant deficit of 1.8 million tons. Full recovery is not anticipated until 2028.
Wood Mackenzie analysts suggest that part of the supply-demand gap could be addressed through limited substitution in the packaging and automotive sectors, along with increased recycling efforts. Greater use of scrap aluminum could partially ease raw material shortages, although significant challenges remain. As a result, the global aluminum market is expected to face substantial deficits over the next 18 months.
Aluminum shortage hits Europe and Japan hardest
Europe is among the regions most exposed to supply disruptions, importing between 20% and 25% of its aluminum from the affected area. Japan is even more vulnerable. As the world’s largest importer of Middle Eastern aluminum, the country relies on the region for roughly 30% of its total aluminum demand.
The challenge is not only about volumes but also about product specifications. Aluminum alloys produced in the Middle East are critical for certain applications, including wheel manufacturing, and replacing these supplies with alternative sources is proving highly complex.
Warning signs are already emerging across the automotive sector. Toyota Motor Corporation estimates a €4 billion impact on its current fiscal year, with more than €2 billion linked directly to higher material costs. Mitsubishi Motors Corporation expects a ¥30 billion hit, about half of which is attributed to rising procurement expenses. Meanwhile, Nissan Motor Co., Ltd. projects a ¥15 billion impact during the first half of the fiscal year.
Market outlook and consumer risks
While analysts do not expect a complete shortage of aluminum, the primary risk may ultimately fall on consumers.
If higher raw material costs translate into more expensive vehicles, market demand, already under pressure from economic uncertainty and elevated financing costs, could weaken further. For automakers, the challenge will be balancing rising production expenses with the need to maintain competitive pricing in an increasingly fragile global market.