Emirates Global Aluminum will route its aluminum exports and raw materials through Oman’s port of Sohar in the next few days due to conflict in the Middle East shutting the Strait of Hormuz, three sources with knowledge of the matter said.
The U.S.-Israeli war against Iran is now in its third week and companies in the region, including aluminum producers, are looking for alternative ways to export.
Aluminum prices hit a four-year high at US$3,546.50 per metric ton last week, up 12 per cent since the conflict started on concerns about larger shortages on the global market.
Companies diverting imports, exports
Companies have been diverting inbound cargo destined for Gulf countries to ports outside the Strait of Hormuz such as Sohar and Fujairah in the United Arab Emirates (UAE) and then using trucks to move containers to their destinations.
In terms of exports, in addition to crude oil, oil products and liquefied natural gas, the Gulf is home to around seven million metric tons of aluminum production or about nine per cent of the world’s supply.
Nearly 80 per cent of it is exported, mostly to the United States and Europe, supplying the auto, construction and packaging industries.
EGA will import alumina feedstock via Sohar, one of the sources said, adding it would then be taken by truck to either Dubai or Abu Dhabi where it smelts aluminum.
It also plans to begin trucking the aluminum it produces to Sohar for export this week, the sources said. They added they did not know how much alumina EGA would import nor how much aluminum it planned to export via Sohar.
Asked for comment on sources telling Reuters about these plans, Simon Buerk, senior vice president corporate affairs at EGA, said: “We are not going to give a running commentary on how we are managing the current situation, but will say that the points you gave include some inaccuracies." Buerk declined to elaborate.
EGA produces around 2.7 million metric tons of primary aluminum annually in the UAE.
Alba may follow
Aluminum Bahrain (Alba), which produces 1.6 million tons annually, is also potentially interested in using Sohar, two of the sources with knowledge of the matter said.
Alba is also exploring the possibility of using Jeddah on Saudi Arabia’s Red Sea Coast, they said.
Alba did not respond to a Reuters request for comment. Omani smelter Sohar Aluminium has a facility at Sohar which it uses to import raw materials and export aluminum products.
There is no record of the port being directly attacked since its development more than two decades ago. Drones that crashed in Sohar province last week did not damage the port, two of the sources said.
(Reporting by Pratima Desai and Tom Daly; additional reporting by Polina Devitt; editing by Keith Weir and Jason Neely)
