- Attacks on LNG, gas and storage infrastructure heighten supply risks across energy markets
- Rising gas costs and freight disruptions tighten scrap flows and steel margins
How will the ongoing conflict in the Middle East affect the global metals markets? As the US-Israel and Iran war escalates, BigMint presents a lowdown of the impact of this geopolitical conflict on the Indian metals, raw materials and energy markets:
Escalating attacks on energy infrastructure across the Gulf are intensifying supply risks in global gas and oil markets, with direct implications for India’s energy-dependent industrial sectors.
Recent strikes have expanded beyond oil storage and refining to include LNG and upstream gas assets, raising concerns about broader supply disruptions. Drone attacks on Fujairah’s oil storage and bunkering hub disrupted terminal operations and forced vessel movements, while a separate strike temporarily halted operations at Abu Dhabi’s Shah gas field, according to media reports.
At the same time, Qatar’s Ras Laffan industrial complex has suffered repeated missile strikes causing significant damage to LNG facilities, while geopolitical tensions have escalated further after threats to Iran’s South Pars gas field, according to media reports.
Prices of very low sulphur fuel oil in Singapore, a key marine bunker benchmark, stood at $1,004/t on 18 March, reflecting elevated fuel cost pressures and persistent risk premiums linked to shipping disruptions.
The US Federal Reserve held interest rates steady, citing uncertainty from Middle East developments and warning that higher energy prices could add to inflationary pressures. For India, sustained high global energy costs alongside a steady global rate environment could prolong imported inflation pressures, particularly across fuel-linked industrial inputs, according to media reports.
Against this backdrop, India’s gas market is emerging as a key transmission channel. Rising global gas risks, coupled with domestic allocation curbs, are tightening supply for industrial users and pushing up input costs across sectors. LPG prices in India have increased by around 15-20% in recent weeks to approximately INR 1,100-1,200 per cylinder, while oxygen costs have risen by about 10%, pushing up scrap processing expenses by INR 200-300/t.
Steel
Gas and energy cost pressures are feeding into the steel value chain, particularly in secondary steelmaking, where scrap availability and processing costs are critical. Rising LPG and oxygen costs are squeezing scrap processors, leading to slower arrivals and tighter availability across key markets. Reduced ship-breaking activity and disruptions to alternative metallic flows are further tightening supply.
India’s induction furnace steel market continues to show mixed trends. Sponge iron prices have declined by around INR 100-300/t across several regions, while billet and rebar prices remain largely range-bound amid cautious buying.
The divergence between relatively stable finished steel prices and rising raw material and processing costs is pointing to growing margin compression across secondary steel producers.
Export markets remain under pressure. Disruptions across the Strait of Hormuz and surrounding shipping lanes have led to vessel rerouting, extending transit times by 15-20 days and increasing freight and insurance costs, prompting mills to hold back fresh export offers.
The Gulf remains a major destination for Indian steel exports, making shipping disruptions particularly relevant for trade flows.
Ferrous scrap
Ferrous scrap markets reflect weaker buying sentiment alongside tightening supply visibility. Imported scrap demand remains subdued, with buyers targeting $370-375/t CFR for shredded scrap despite rising freight and bunker costs. Limited trades indicate cautious sentiment, while suppliers have adjusted offers to stimulate buying.
Indicative levels stand near $360/t for HMS (80:20), $370/t for HMS 1 and $380/t for shredded scrap, while other South Asian markets remain relatively firmer. Disruptions in the Strait of Hormuz have affected vessel movement and cargo flows, tightening supply visibility, while reduced availability of alternative metallics has added to constraints.
Domestic scrap markets show diverging regional trends. Prices in north India have increased, with HMS (80:20) in Mandi Gobindgarh rising by around INR 300/t to INR 35,500/t, while western markets such as Mumbai remain stable near INR 33,700/t. Rising processing costs and lower scrap generation continue to reinforce supply tightness, particularly for smaller processors.
Non-ferrous metals
Aluminium markets remain sensitive to developments in the Middle East, which accounts for roughly 9% of global output, with Aluminium Bahrain shutting multiple smelting lines and reinforcing concerns over potential supply disruptions. LME aluminium prices hovered near $3,420/t on 17 March, while inventories declined to around 442,825 tonnes, indicating tightening availability, with domestic ingot prices firm at INR 350,000-352,000/t ex-Delhi alongside elevated scrap values.
Copper markets, in contrast, have seen limited direct supply disruption, with prices near $12,855/t supported by sentiment and demand expectations, although higher freight costs and war-risk premiums are influencing trade flows. Meanwhile, gas supply constraints are affecting zinc value chains, particularly galvanizing operations reliant on LPG, with rising fuel costs and tighter availability expected to weigh on downstream consumption if disruptions persist.
Coal and energy
Energy markets remain the primary transmission channel through which Middle East tensions are affecting Indian commodities. Brent crude prices remain elevated amid continued attacks on energy infrastructure and shipping risks.
Premium hard coking coal prices remain supported by higher freight costs and tighter vessel availability, while thermal coal markets show mixed trends with some correction emerging. Petcoke prices continue to move higher, supported by firm demand and tightening global supply conditions.
Freight and logistics
Freight markets remain under pressure as attacks on energy infrastructure and commercial vessels reshape shipping patterns. More than 20 incidents involving commercial vessels and offshore infrastructure have been reported across the Gulf, Strait of Hormuz and Gulf of Oman since late February, highlighting the scale of disruption to maritime trade, according to media reports.
Shipowners are rerouting vessels away from high-risk areas, while war-risk insurance premiums have risen sharply, extending voyage times and tightening vessel availability across key routes. The combined impact of escalating energy infrastructure attacks, rising gas costs and tightening scrap supply is now feeding into multiple layers of India’s metals value chain.
If disruptions persist, elevated processing costs, constrained scrap availability and freight volatility could continue to shape pricing, margins and trade flows across the steel and metals sectors in the coming weeks.
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