Arab News Japan

TOKYO: After an Iranian missile attack severely damaged Emirates Global Aluminum, the largest aluminum producer in the United Arab Emirates, there are fears that there could be a shortage of aluminum.

TOMITA Shotaro, the president of a Japanese aluminum trading company called Hokusei Metal, believes this incident will exacerbate aluminum price increases and create supply shortages. “This could be a turning point that fundamentally alters the global supply and demand balance for aluminum,” he told Tulip TV.

Japan relies almost entirely on imports for aluminum, with China being the largest source (20 percent), followed by the UAE (over 10 percent), according to the report.

The price of aluminum is determined by the price on the London Metal Exchange (LME) plus a Japan premium, as well as the exchange rate. Tomita says the LME price, the Japan premium and the exchange rate are all rising right now and the bombing could mean the supply of aluminum will decrease.

There are also logistics problems due to the blockade of the Strait of Hormuz, meaning that even if there is inventory, it cannot be shipped. Ultimately, costs will increase and these costs will be passed on to consumers. Prices of all kinds of products could rise, from automotive parts and aluminum building materials to aluminum beverage cans and even packaging for sweets and medicines.