Impact of the Iran War on Europe’s Aluminium Industry and Competitiveness

As European leaders gather for the European Council, one thing must be clear: Europe needs to take decisive action to protect its strategic sectors.

Ongoing conflict in the Middle East is fuelling market instability and placing renewed strain on Europe’s aluminium value chain. With around 14% of EU aluminium imports coming from this region, disruptions are already tightening supply and driving up costs, with aluminium prices rising sharply in recent weeks.

At the same time, disruption to shipping through the Strait of Hormuz is contributing to rising energy costs. For aluminium, one of Europe’s most energy-intensive sectors, price fluctuations have a direct impact.

Since late February, EU gas prices — a key driver of electricity costs — have surged by over 60%, briefly peaking above €60/MWh. Electricity prices have followed, rising 20–30% across major markets and now hovering between €80 and €130/MWh.

With power prices already up to three times higher than in competing regions, pressure on European producers is mounting fast.

Europe has already lost approximately 50% of its primary aluminium production capacity since 2022, weakening its domestic capacity to produce this strategic material.

As global primary aluminium supply tightens, competition for aluminium scrap is intensifying, with higher-paying international markets drawing scrap away from Europe. This growing leakage is further weakening the recycling and transformation sector at a time when maintaining a strong value chain is extremely critical: that’s why it is now more urgent than ever to implement an effective trade measure to address aluminium scrap leakage, by Spring 2026.

We welcome the European Commission’s commitment to reinforcing Europe’s industrial base through the proposed Industrial Accelerator Act, and its recognition of aluminium as a strategic material. The months ahead will be crucial to shaping a framework that truly delivers for Europe’s aluminium industry to ensure the Act meets its promise, not just in ambition, but in impact.

Read European Aluminium’s letter to EU Heads of State and Government and Commissioners, detailing the urgent actions needed to safeguard the aluminium industry and reinforce Europe’s resilience: