- LNG supply disruptions and higher prices deepen gas curbs, tightening metals value chains
- Rising freight, bunker fuel and input costs compress steel margins despite softening domestic prices
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:
Disruptions to LNG supply, shipping through the Strait of Hormuz and elevated global energy prices are tightening gas availability in India, forcing deeper curbs on industrial consumption.
LNG prices have surged above $20/MMBtu amid attacks on vessels near the Strait of Hormuz and strikes on key export infrastructure, raising concerns over supply volatility and demand destruction, according to media reports. Brent crude has strengthened further and is trading around $112/bbl, reinforcing cost pressures across the energy complex.
The disruption to Qatar’s Ras Laffan LNG facility has reduced export capacity by about 12.8 million tonnes per year, although India’s long-term contracted supplies are expected to remain largely intact, according to media reports. However, spot availability remains tight, with traders flagging continued constraints and potential force majeure risks.
India remains heavily exposed to Ras Laffan, which accounts for roughly 45% of LNG imports. At least one LNG cargo has faced delays near the Strait of Hormuz, highlighting ongoing logistical risks, while landed LNG prices into India’s west coast have risen sharply, according to media reports.
In response, India is expanding supply diversification. LPG imports from Argentina have more than doubled to about 50,000 tonnes in the first quarter of 2026 compared with 22,000 tonnes in full-year 2025, according to media reports.
At the same time, emergency crude releases from strategic reserves are underway globally, but their impact on stabilising prices has remained limited amid persistent geopolitical risk, according to media reports. Against this backdrop, India has tightened gas allocation to prioritise essential sectors, reducing supply to petrochemicals, power and industrial users.
Steel
Gas curbs are increasingly feeding into the steel value chain, particularly in secondary steelmaking and scrap processing segments dependent on LPG and industrial gases.
Domestic steel markets are showing mixed trends. Billet prices have declined by around INR 100-700/t week-on-week across major regions, while sponge iron prices have fallen by INR 50-700/t amid uneven demand conditions, with selective gains in Chennai and Durgapur supported by local demand variations.
Rebar prices have softened by INR 100-800/t across key markets, reflecting mild correction and cautious procurement, while buyers continue to resist higher offers despite rising input costs. The gap between softening finished steel prices and rising energy, freight and processing costs is compressing margins across secondary steel producers.
Export activity remains subdued. Higher freight costs, war-risk premiums and limited visibility on shipping routes are reducing competitiveness, with buyers delaying bookings and mills holding back fresh offers. The Gulf remains a key destination for Indian steel exports, making shipping disruptions particularly relevant for trade flows.
Ferrous scrap
Imported scrap markets remain under pressure from elevated freight costs and supply uncertainty. Container and bulk freight rates have remained firm, keeping landed prices high despite weak buying interest. Shredded scrap prices to India are holding around $385-390/t CFR, while HMS (80:20) is near $375-380/t, with limited trades reported as mills resist higher offers amid weak finished steel demand.
Domestic scrap markets are tightening. HMS prices in Mandi Gobindgarh have risen by around INR 400/t to approximately INR 35,500/t, while Alang prices are near INR 35,000/t amid supply constraints and rising gas costs. Gas shortages are also affecting scrap processing and ship-breaking activity, with Alang utilisation potentially declining to 40-50% if disruptions persist, tightening supply further.
Non-ferrous metals
Aluminium markets have seen sharp volatility, with LME prices correcting to around $3,210/t on 20 March after a steep sell-off, while inventories declined to roughly 432,700 tonnes, indicating tighter availability alongside broader risk aversion. Domestic ingot prices are lower at around INR 338,000-340,000/t ex-Delhi.
Copper prices have eased to around $12,140/t, down around 2% day-on-day, reflecting rising inventories and weaker demand signals, while zinc markets are under pressure from LPG shortages affecting galvanizing operations.
Coal and energy
Higher energy prices continue to feed into raw material costs across the metals sector. Brent crude remains elevated at around $112/bbl, while tight LNG markets are reinforcing upward pressure on industrial fuel costs.
Premium hard coking coal prices remain supported by higher freight costs and tighter vessel availability, while petcoke markets are firm amid steady demand and constrained supply.
Freight and logistics
Shipping risks in the Gulf remain a key driver of cost escalation. Attacks on vessels and heightened geopolitical tensions are increasing war-risk insurance premiums and forcing shipowners to reassess routing decisions. Prices of very low sulphur fuel oil in Singapore stood at $1,015/t on 20 March, reflecting elevated bunker fuel costs.
Higher bunker fuel prices, combined with vessel rerouting, are increasing freight rates, extending transit times and tightening vessel availability across bulk commodity supply chains. The interaction between LNG supply disruption, tighter domestic gas allocation and freight volatility is now feeding directly into scrap availability and steel production costs.
If LNG flows remain constrained and shipping risks persist, tighter scrap supply and sustained cost pressures could begin to push steel prices higher, reversing the current phase of margin compression and reshaping trade flows across the region.
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