Toyota, Honda, Nissan Face Aluminium Crisis: Iran War Hits Supplies

Toyota CEO Koji Sato has warned of aluminium shortages for Japan's auto industry due to the Iran war. Addressing a press conference of the Japan Automobile Manufacturers Association (JAMA), Sato’s warning covers Japanese automakers like Toyota, Nissan, and Honda. 

He said, “With regard to the materials like aluminium; about 70% of it comes from the Middle East. And so if this situation (Iran-US War) prolongs, needless to say, there's going to be procurement problems, I think there should be alternative sources and to explore and depending on how long the situation will prolong our options will need to be changed for the time being.”

The conflict has disrupted supplies through the Strait of Hormuz. Gulf producers like Aluminium Bahrain and Emirates Global Aluminium declared force majeure. This affects 10% of global aluminium supply.

Japan relies on imports for aluminium. Auto-parts makers use it for wheels and engine parts. Japanese firms have already kick started conversations with some Russian foundries according to Automotive News and some deals are likely to close soon. 

While the companies are looking at alternate suppliers, they are also figuring out alternative routes to get their shipments. 

Sato mentioned, “With regard to the logistics, the ships cannot enter the strait of Hormuz and that would bring us a delay in the procurement and we are witnessing that usually the shipping period or lead time is by about 50 days and anyway we have to secure the shipping route. So we have been selecting different roads. For example the Cape Of Good Hope but the distance is going to be doubled, therefore how the shipping route is going to be secured for the final products. This is going to depend on the logistic capacity as well as the manufacturing capacity.And each member company is working on that.”