On the afternoon of August 11, Beijing time, London aluminum futures rose sharply, reaching their highest level in nearly seven weeks. The rally may extend aluminum’s recent winning streak to a fifth consecutive trading day.

The latest market move followed news that Norsk Hydro has reduced alumina production at its Alunorte refinery in Brazil to 50% of capacity due to problems with natural gas supply.

According to public information, the Alunorte refinery has a designed annual production capacity of approximately 6.3 million metric tons and is widely regarded as the largest alumina refinery outside China. Alumina is a critical raw material for primary aluminum production.

Natural Gas Supply Disruption Hits Alunorte

Norsk Hydro said the refinery is taking emergency measures to reduce the operational impact, including purchasing natural gas directly from the spot market.

The timing of any production recovery will depend largely on the restoration and stability of natural gas supplies.

Due to the production reduction and the higher cost of purchasing natural gas on the spot market, Hydro currently estimates that its Bauxite & Alumina business could face a financial impact of approximately USD 75 million to USD 100 million in the third quarter.

The refinery’s natural gas supplier, CELBA, is a subsidiary of New Fortress Energy. Its parent company has been undergoing financial restructuring following significant pressure in the bond market since late last year.

Global Aluminum Supply Remains Under Pressure

The latest alumina supply disruption comes at a time when geopolitical tensions in the Middle East are already putting pressure on the global aluminum market.

Supply interruptions since the beginning of the year have affected a significant portion of the global aluminum market, contributing to a sharp increase in aluminum prices.

Although aluminum prices experienced a substantial correction in June, they have continued to recover since late June.

At the same time, inventories on the London Metal Exchange (LME) have fallen to around 250,000 metric tons, their lowest level since November 1990.

Geopolitical Risks Add More Uncertainty

Recent tensions between Iran and the United States have also increased uncertainty surrounding the normalization of commodity supplies.

Both sides have raised a series of new demands covering a broad range of issues, including compensation related to the conflict. The increasingly tough positions have weakened expectations for a rapid return to normal trade flows.

Energy markets are showing similar pressure. Brent crude oil futures have moved back toward USD 90 per barrel, adding another layer of cost pressure to energy-intensive industries.

Norsk Hydro previously warned that if trade through the Strait of Hormuz fails to return to normal, the global aluminum supply deficit this year could exceed the company’s earlier estimate of 900,000 metric tons.

What Could This Mean for Alumina and Abrasives Buyers?

For buyers of alumina-based materials, the Alunorte production cut is worth watching closely.

A prolonged reduction at one of the world’s largest alumina refineries outside China could further tighten global alumina availability. Combined with low aluminum inventories, geopolitical uncertainty and elevated energy costs, this may increase volatility across the alumina and aluminum value chain.

For abrasive manufacturers using alumina-based raw materials, including white fused alumina, brown fused alumina and other aluminum oxide products, changes in upstream alumina supply and energy costs could eventually influence production costs and market pricing.

Buyers with procurement plans for the coming months may therefore want to monitor alumina supply, energy prices and international freight conditions more closely.