13% Aluminum Price Jump Forces Toyota Supply Constraints, Denso Cuts 20,000 Units
Toyota and other Japanese automakers source roughly 70% of their aluminum from the Middle East, where disruptions tied to the Iran conflict have driven prices up 13% since February, squeezing margins. Denso has cut monthly output by 20,000 units and suppliers could exhaust inventory by May, risking broader production halts.
1. Aluminum Supply Shock
Toyota and peers source approximately 70% of their aluminum imports from the Middle East, where Iran conflict–related disruptions have halted shipments. Aluminum prices have risen 13% since February, increasing costs for engine components and wheels as shipping routes through the Persian Gulf remain congested.
2. Production Impact
Denso, a major Toyota supplier, reduced monthly output by around 20,000 units in late March due to aluminum shortages. Smaller suppliers like Kato Light Metal expect current inventory to last through May before shifting to Southeast Asian sources, while Toyota evaluates procurement strategies to avoid direct production cuts.
3. Outlook and Risks
Damage to refineries in Abu Dhabi and Bahrain, along with hundreds of ships stuck in the Persian Gulf, may prolong tight supply conditions for months. With most manufacturers holding roughly two months of aluminum stock, broader shortages could emerge by late April or early May, prompting temporary factory slowdowns if alternatives aren’t secured.