Japan manufacturers hurt most by aluminium shortage from Iran war
Most companies in the country often maintain about two months of inventory for parts or raw material
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[TOKYO] Japan’s reliance on the Middle East for aluminium is forcing companies to cut back on production and scramble for alternative supply sources after key shipping routes were severed due to the Iran conflict.
Among the most exposed are auto and parts makers such as Toyota Motor and Denso. Domestic carmakers get about 70 per cent of their aluminium imports from the Middle East, according to the nation’s top auto lobby. The price of the lightweight alloy, used in everything from engine parts to wheels, has jumped about 13 per cent since hostilities started in late February.
“It’s only been a month but it’s almost certain that we will soon have trouble making automobile parts,” Daiki Kato, CEO of Kato Light Metal Industry, said in an interview in late March. “We are going to spend more selectively and conserve our energy.”
With the Middle East’s top aluminium producer predicting it would take at least a year to restore full production, Japan is at the forefront of what may spiral into a prolonged global shortage of the metal. JPMorgan Chase analysts warned last week that the industry had entered a “black hole” it will not easily come back from. Even if a peace deal is reached and the vita; Strait of Hormuz reopens, it could still take months for shipping to resume normal levels.
Japan imported around 590,000 tonnes of aluminium, or about 30 per cent of its total supply from the Middle East in 2025, according to the Japan Aluminium Association. America imports more aluminium than Japan but US companies are not in danger of running out of aluminium because they get most of their supply at home and Canada, according to Bloomberg Intelligence.
Japan is the most vulnerable country to aluminium shortages, according to S&P Global analyst Masatoshi Nishimoto. South-east Asia, China and South Korea are also among nations that face “the greatest risk”, he said.
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Not only has the war reduced shipping through the Strait of Hormuz, but key aluminium refineries in Abu Dhabi and Bahrain were damaged in the early stages of the conflict as Iran attacked its regional neighbours in response to the US and Israeli assault.
One company feeling the impact is Kato Light Metal. Based in Aichi Prefecture, the firm makes a variety of aluminium products, mostly for construction or automobiles.
It imports about 400 tonnes of aluminium every month, roughly 200 tonnes each from Dubai and Australia. While deliveries from the Middle East have stopped, the company said that it has enough inventory to last through May. Beyond that, it plans to buy aluminium from a supplier in South-east Asia.
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Elsewhere, Toyota supplier Denso and its affiliates have had to reduce monthly output by around 20,000 units, the company said in late March, resulting in sizeable losses.
Supply constraints from the region could persist for months even if the war finishes, as refineries take time to get back online, and shipping companies work to unclog a bottleneck of hundreds of ships stuck in the Persian Gulf.
Most companies in Japan often maintain about two months of inventory for parts or raw materials. That means many could start to suffer disruptions by the end of this month or early May.
Spokespeople for Toyota declined to comment on aluminium or impending supply shortages, but said they’re monitoring the situation. Nissan Motor said that the company is “taking appropriate measures, including adjustments to our production and logistics operations”.
“The conflict is beginning to affect deliveries and supplies,” said Koji Sato, chair of the Japan Automobile Manufacturer’s Association and Toyota’s former CEO.
Aluminium is the most commonly used metal after steel. Lighter and better at dissipating heat, it’s a key component in engine parts such as pistons and cylinder heads, along with body panels and alloy wheels. It is also used for everything from electronics and building materials to beer cans and potato chip bags.
The disruption to supplies could lead companies to run out of certain specialised products, forcing factories into temporary shutdowns. The longer the war drags on, the longer supply chains will take to recover, increasing the risk production grinds to a complete halt.
“Manufacturers are starting to seek out alternatives as their inventories begin to run dry,” said Koji Iida from the Japan Aluminium Association. “It’s an extremely difficult situation and concerns are high among small and medium-sized companies.” BLOOMBERG
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