Alunorte Output Cut Sends LME Aluminum to Seven-Week High as Exchange Stocks Hit 36-Year Low
A 50% output cut at Norsk Hydro's Brazilian alumina giant has pushed LME aluminum inventories to their lowest since 1990, exposing how thin the metal's supply buffer has become.
Aluminum rose nearly 2% in London on Wednesday (2026-08-12) to $3,373 a metric ton after Bloomberg reported that natural gas supply disruptions had forced Norsk Hydro to cut output at its Alunorte refinery in Brazil by half, pushing the metal to a seven-week high. Alumina futures in Shanghai gained 1% in the same session.5
LME warehouse inventories now stand at 250,000 tons, the lowest recorded since November 1990. Three and a half decades of inventory cushion have been eroded to a point where a single refinery disruption in Pará state moves prices by two percentage points in a session.5
Alunorte, located in Barcarena, Pará, holds annual production capacity of 6.3 million metric tons, ranking it among the largest alumina refineries in the world. A 50% cut represents a substantial reduction in upstream feed for aluminum smelters, and the disruption was driven not by mechanical failure or labor action but by constrained natural gas availability — a supply chain vulnerability that has grown increasingly acute since the Strait of Hormuz conflict began earlier this year.5
The connection to the Hormuz disruption runs through energy markets. The Strait previously handled nearly 20% of global oil supply and about one-fifth of global LNG trade, according to OGJ reporting. In 2025, some 18.2 million barrels per day of crude oil and refined products moved through the corridor. When that flow constricted, energy costs rose across multiple geographies and created knock-on tightness in industrial gas markets of the kind now being felt at Alunorte.2
Norsk Hydro has drawn a direct line between the Hormuz situation and the global aluminum balance. The company warned that the annual global aluminum deficit could exceed 900,000 tons if trade through the strait remained disrupted. With LME inventories already at generational lows before the Wednesday (2026-08-12) output cut, that warning is harder to set aside.5
The broader supply picture reinforces the concern. The IEA estimated global oil supply has fallen by 12.8 million barrels per day since the onset of the conflict, with the monthly decline running at 1.8 million b/d. EIA figures put Middle East crude shut-ins at an average of 10.5 million b/d in April, expected to peak near 10.8 million b/d in May as storage capacity filled. OPEC+ production dropped 1.9 million b/d between March and April to 40.1 million b/d, leaving output 11.9 million b/d below pre-war levels.2
Asian economies bear the most concentrated exposure to that disruption. China imported close to 5 million barrels per day through the strait, while India, Japan, and South Korea each moved roughly 2 million b/d through the same chokepoint, with Asian buyers collectively accounting for nearly 80% of Hormuz oil flows. Industrial gas availability in Brazil is several steps removed from Middle Eastern crude volumes, but both trace back to the same bottleneck.2
Oil prices have come off their peaks since the most acute phase of the conflict. ICE Brent crude front-month was trading at $87.80 a barrel as of 07:02 UTC on 2026-08-14, up 0.87% on the session. In June, benchmark prices fell sharply: Brent settled more than $3 lower on Wednesday (2026-06-24) to its lowest level since before the war began, as more stranded tankers exited the Hormuz strait and supply concerns eased. By mid-June (2026-06-16), Brent had dipped below $80 a barrel for the first time since the early days of the conflict, as traders gained confidence in a US-Iran peace framework.4,3
But the aluminum market has not followed crude lower in the way some might have expected. Reduced energy costs help smelting economics, yet they do not rebuild inventories depleted during the earlier supply shock or restore gas availability at a specific refinery in Barcarena facing its own infrastructure constraints. The LME stock figure reflects cumulative drawdown, not a real-time response to spot energy prices.5
The IEA warned as of May 8 (2026-05-08) that governments and industry had already released 164 million barrels from strategic reserves to offset supply losses, with rapidly shrinking buffers pointing toward further price volatility. Separately, estimates circulating in May suggested cumulative production losses had already reached approximately 1 billion barrels, dwarfing the IEA's planned 400-million-barrel strategic release.1
For aluminum traders, the immediate question is how quickly Alunorte can restore gas supply and restart full output. Until that is answered, a market running on 250,000 tons of LME inventory has very little room to absorb further production outages anywhere else in the supply chain.5