Global Aluminum Output Slips 1.5% as War Tightens Supply

World primary aluminum production fell 1.5% year-on-year in June to 5.98 million tonnes, the International Aluminium Institute reported, with a Gulf smelter outage cutting regional supply by a third, a tightening backdrop for Mexico's import-reliant manufacturers already squeezed by 50% US metal tariffs.

Primary aluminum production worldwide slipped 1.5% compared with a year earlier in June, retreating to 5.9Mt, the International Aluminium Institute (IAI) reported. Nearly all of that weakness traced back to the Persian Gulf, where volumes fell by about a third versus the same month last year.

A pair of Gulf smelters that together supply close to 9% of the planet's primary aluminum capacity were forced to halt after a late-March strike, blamed on Iran during the broader Middle East conflict. Beyond the physical damage, the plants lost access to their normal export routes, keeping their metal sidelined from global trade long after the attack itself. The region's June output came in at 332,000t, a steep drop from the 507,000t recorded a year before.

Measured per day, Gulf production was essentially flat against May at roughly 11,000t, though that still trails the pre-conflict baseline of 17,800t by a wide margin. Emirates Global Aluminium reported this month that it had brought its Al Taweelah plant in Abu Dhabi back on line sooner than anticipated after the emergency stoppage, while cautioning that reaching earlier production levels again may take as long as a year. Globally, daily output averaged 199,300t over the month, up 0.3% from May, a comparison flattered by that month's extra day on the calendar.

A Tighter Market Meets a Tariff Squeeze

For Mexico, a manufacturing economy that leans on imported aluminum rather than domestic smelting, a supply-constrained global market compounds an already difficult trade picture. The country's automotive, aerospace, packaging, and construction sectors are heavy aluminum consumers, and the metal moves across the US border under some of the steepest duties in the current tariff regime.

Washington's Section 232 program taxes steel and aluminum at 50%, and Mexican exporters have felt the strain directly. The tariffs helped drive Mexico's steel exports to the United States down 36.6% in 2025 and pushed the country to pay nearly US$23 billion in tariffs at US customs over the twelve months through April 2026. Mexico has formally asked for the removal of Section 232 duties on steel, aluminum, and autos as part of the USMCA Joint Review.

The pressure intensified after President Donald Trump restructured the metals tariffs on June 1 into a tiered system running through 2027, keeping the 50% rate on aluminum, steel, and copper while adding derivative products. Economy Minister Marcelo Ebrard has called the duties unsustainable, warning that without broader relief as many as 350,000 manufacturing jobs, concentrated in the auto sector, could be lost by the end of 2026.

Narrow Openings and a Domestic Response

There are limited channels for relief. In April, the US Department of Commerce opened a process that could halve Section 232 duties for steel and aluminum producers operating in Mexico or Canada, provided they commit to expanding primary US capacity tied to automotive supply chains, an opportunity paired with a clear constraint. The new metal tariff rules Trump signed ended product exclusions and blocked tariff stacking, sharpening the incentive for firms to localize.

That environment is nudging investment toward North American aluminum capacity. Producers are commissioning recycled-aluminum and finishing operations inside Mexico to serve regional automakers, part of a broader effort to close documented shortfalls in high-pressure aluminum casting for the auto industry. A tighter global market only strengthens the logic of building supply closer to where the metal is consumed.

Aluminum also sits outside newer US trade actions precisely because Section 232 already covers it. When Mexico pressed Washington for an exemption from proposed forced-labor tariffs, officials noted that autos, steel, and aluminum fall beyond that probe since the metals orders tax them at rates reaching 50%, cold comfort for an industry already carrying the heaviest load.

What to Watch

June's data suggests the Gulf disruption is easing rather than resolved, with daily output still well short of pre-conflict norms and a year-long ramp ahead at Al Taweelah. For Mexican buyers, the combination of constrained supply and punitive tariffs raises input costs at a delicate moment, as Ebrard steers the USMCA review toward a decade of annual assessments rather than a clean long-term extension. With roughly 85% of Mexican goods still entering the US duty-free, the outstanding fight over steel and aluminum remains one of the sharpest unresolved items on the table, and a tighter world market gives it fresh urgency.