Norsk Hydro warns of deepening aluminum deficit amid Hormuz shutdown

Norsk Hydro CEO Eivind Kallevik warned on Tuesday that the global aluminum market faces deepening deficits as renewed disruptions to shipping through the Strait of Hormuz compound pressure on already-strained supply chains, even as the Norwegian producer reported strong second-quarter results.

Presenting Q2 2026 earnings on July 22, Kallevik highlighted an estimated global aluminum undersupply of 0.9 million tonnes for 2026, with the world outside China facing a 1.1 million tonne shortfall. The company noted that customers in both U.S. and European markets are increasingly seeking local suppliers "due to uncertainty around overseas shipments," as the collapse of a U.S.-Iran ceasefire has again shut down the critical waterway.Investing.com

Hormuz Closure Strangles Gulf Exports

The warning comes less than two weeks after Iran declared the Strait of Hormuz closed "until further notice" on July 11, following the breakdown of a 60-day ceasefire on July 8. The United Nations' International Maritime Organization reported that renewed hostilities brought shipping to "a near-standstill," leaving around 6,000 seafarers stranded aboard hundreds of vessels.Council on Foreign Relations+2

The strait handles exports of roughly 5.5 million tonnes of Gulf Cooperation Council primary aluminum annually. Before the war began in late February, the Persian Gulf region was a major hub for aluminum production and export, with smelters in Qatar, Bahrain, and the UAE supplying global markets.NPR+1

Norsk Hydro has been among the hardest-hit Western producers. Its Qatalum joint venture in Qatar has operated at only about 60% capacity since March due to war-related gas disruptions, and the company declared a second force majeure on aluminum sales in June after Qatalum terminated a key marketing agreement.marketwatch+1

Strong Results Mask Ongoing Vulnerability

Despite the geopolitical headwinds, Hydro's Q2 adjusted EBITDA rose 15% year-over-year to NOK 8.9 billion, driven by elevated aluminum prices and premiums. European duty-paid premiums surged to nearly $2,500 per tonne, up from approximately $400 per tonne in early 2024. The company also announced the restart of 75,000 tonnes of capacity at its Slovalco smelter in Slovakia on July 1.Hydro+2

Kallevik framed the Slovalco restart as evidence that "competitive energy and predictable framework conditions unlock investments and strengthen Europe's industrial resilience". But the broader supply picture remains precarious. With Gulf smelters operating well below capacity and shipping lanes again paralyzed, the aluminum market's dependence on the Strait of Hormuz has become an acute vulnerability — one that shows no sign of resolving as U.S.-Iran tensions escalate further.reuters+2