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Aluminium production outside the Gulf region could also face disruptions if shortages of petroleum coke worsen due to the continued closure of the Strait of Hormuz, according to a report by JP Morgan.
The report said petroleum coke, an important raw material used in aluminium production, could become a major challenge for aluminium producers globally amid the ongoing conflict in the Persian Gulf. It stated that if the Strait of Hormuz remains closed and petroleum coke shortages become severe, aluminium producers outside the Gulf may also face operational difficulties or may have to cut production. It said, "If petroleum coke shortages become acute, additional aluminium supply outside the Gulf could face operational challenges or be forced to curtail production" According to the report, around 20 per cent of global petroleum coke supply is affected by the Strait of Hormuz closure because petroleum coke is produced during oil refining. The report highlighted that the aluminium market is already facing major supply disruptions due to the conflict in the Persian Gulf and disruption of shipping routes. JP Morgan Commodities Research expects the global aluminium market to face a deficit of around 2 million tonnes in 2026. The report added that continued disruption in alumina shipments to Gulf smelters could lead to more shutdowns in the aluminium industry. Apart from alumina, the report said the petroleum coke market is also under pressure. It noted that both calcined petroleum coke (CPC) and green petroleum coke (GPC) markets are currently facing supply tightness due to shutdowns in the Middle East Gulf region. The report further stated that while many fossil fuel prices have risen sharply since the conflict started, US Gulf petroleum coke prices have increased around 20 per cent so far. JP Morgan also warned about possible supply-demand mismatches even if the conflict eases. According to the report, petroleum coke production may restart faster than aluminium smelting operations because restarting smelters could take 12-18 months. However, the report added that the timing of recovery in both supply and demand remains uncertain. (ANI)
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