- Brent slips toward $100/bbl on de-escalation signals, easing immediate price pressure
- Shipping disruptions persist, sustaining freight costs and supply chain risks
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:
Brent crude prices have eased below the $100/bbl mark, with benchmarks briefly falling below that level after dropping more than 5% on signs of potential de-escalation in the Middle East and a build in US crude inventories, according to media reports.
The decline follows reports of a possible ceasefire framework and improved diplomatic signalling, which have temporarily reduced geopolitical risk premiums in oil markets.
However, physical market conditions remain tight. Shipping activity through the Strait of Hormuz continues to be severely constrained, with vessel transits running about 95% below pre-conflict levels and averaging only a handful of crossings per day, according to media reports.
This divergence between easing prices and disrupted logistics is keeping underlying cost pressures intact across commodity supply chains.
For India, the impact is being felt through elevated freight rates, constrained LNG availability and continued supply chain uncertainty, even as headline crude prices soften.
The rupee remains weak near INR 94 against the US dollar, amplifying the impact of high landed costs across energy, scrap and raw materials.
Steel
Steel markets remain under pressure as easing energy prices have yet to translate into lower input costs. Domestic demand remains subdued, limiting mills’ ability to pass through higher costs. At the same time, freight rates, insurance premiums and raw material costs remain elevated, compressing margins across secondary steel producers.
Export activity continues to be constrained. Disruptions across key shipping routes, including the Red Sea-Suez Canal corridor and the Strait of Hormuz, are increasing transit times and logistics costs, according to media reports.
The Gulf remains a major destination for Indian steel exports, making these disruptions particularly relevant for trade flows.
Ferrous scrap
Imported scrap markets remain weak, with buying interest subdued as higher landed costs and currency pressures limit procurement. Indicative prices are around $365-370/t CFR for HMS (80:20) and $385-390/t for shredded scrap, but limited trades are being concluded, according to media reports.
Globally, scrap prices remain supported by elevated freight and energy costs, even as demand weakens. In India, higher input costs and gas shortages are also affecting scrap processing and procurement. Secondary mills are increasingly cutting production or delaying purchases due to margin pressure and cost uncertainty.
Non-ferrous metals
Aluminium prices remain near $3,225/t, with inventories declining slightly, indicating tightening availability. Domestic scrap markets remain firm due to supply constraints and currency pressures.
Copper prices have stabilised following temporary easing in geopolitical tensions, supported by improved sentiment, although market participants remain cautious about renewed volatility.
Zinc markets continue to face pressure from LPG shortages affecting galvanizing operations, with tighter fuel availability weighing on downstream demand.
Coal and energy
Energy markets remain volatile despite the recent correction in crude prices. Brent crude near $100/bbl reflects a balance between easing geopolitical risk premiums and persistent supply uncertainty. Higher freight costs and logistics disruptions continue to feed into raw material prices.
Coking coal and petcoke markets remain supported by elevated freight costs and constrained shipping availability.
Freight and logistics
Freight markets remain under pressure despite softer crude prices. Shipping activity through the Strait of Hormuz remains severely restricted, while war-risk insurance premiums and rerouting continue to push logistics costs higher.
Limited vessel availability and longer voyage distances are extending transit times and tightening global shipping capacity. Prices of very low sulphur fuel oil in Singapore remain elevated at $894/tonne, reflecting sustained bunker fuel demand and risk premiums despite the recent correction in crude.
The easing in oil prices has provided some short-term relief to markets, but the persistence of shipping disruptions and constrained gas availability continues to underpin cost pressures across India’s metals supply chain.
If shipping flows through the Strait of Hormuz do not normalise, freight-driven cost inflation is likely to remain the dominant factor shaping steel and raw material markets in the near term.
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