Early supply normalisation signals emerge as freight stays weak and exports stall – A 360-degree view

• Initial easing in tanker movements and fuel flows points to partial supply normalisation
• Freight softness and stalled exports continue to signal weak underlying demand

How will the ongoing conflict in the Middle East affect global metals markets? As the US-Israel and Iran war escalates, BigMint presents a sharp update on the implications for the Indian metals, raw materials and energy markets:

Ongoing developments in the Middle East are beginning to show early signs of adjustment alongside persistent risks. While repeated strikes on Iranian steel facilities and threats across Gulf infrastructure continue to keep around 16 mnt of regional steel capacity exposed, shipping activity is showing tentative signs of normalisation, according to media reports and previous BigMint analysis. The first non-Iranian crude tankers have exited the Strait of Hormuz in over a month, suggesting a partial easing in transit restrictions, even as broader geopolitical uncertainty remains elevated.

At the same time, India may receive its first Iranian crude cargo since 2019 under a temporary waiver, with additional LPG cargoes also moving towards Indian ports, indicating selective reopening of supply channels amid ongoing disruptions.

Brent crude is holding near $109/bbl as supply risks persist alongside continued disruption to key shipping corridors. Risks remain across both the Strait of Hormuz and Red Sea routes, sustaining volatility in global energy and commodity flows, even as isolated signs of easing begin to emerge.

However, the broader impact of elevated energy and logistics costs continues to build across commodities. Higher fuel costs are weighing on industrial activity and trade flows, particularly across energy-intensive sectors such as steel and aluminium, compressing margins and prompting more cautious procurement. At the same time, softer freight activity is beginning to signal that trade flows themselves are slowing under the weight of higher costs and uncertainty.

Shipping markets remain volatile. Prices of very low sulphur fuel oil in Singapore are currently around $867/t, down sharply from recent highs near $1,120/t, indicating weaker bunker demand even as crude prices remain elevated. This divergence suggests that shipping activity is not keeping pace with fuel cost increases.

Freight markets are reinforcing this trend. Coal and iron ore vessel rates have softened week-on-week amid limited fixture activity and cautious sentiment, pointing to reduced cargo movement despite ongoing geopolitical risks. Improved vessel availability and increased cargo arrivals have also started to weigh on portside coal markets. South African RB2 (5,500 NAR) prices at Paradip remain around INR 11,550/t after easing in the previous week, reflecting improving supply conditions and softer logistics constraints.

The impact on steel markets is becoming more nuanced. Export activity remains largely stalled, with no firm offers reported amid elevated freight uncertainty, vessel diversions and limited visibility, according to media reports. Slower shipping activity and higher logistics costs are reducing export viability, while subdued demand continues to limit mills’ ability to pass through rising costs.

At the same time, domestic price trends show limited strength. Billet, rebar and scrap prices have edged higher over the past week, supported by tightening raw material availability and ongoing procurement by mills, even as buying activity remains cautious and largely need-based. This suggests that price support is being driven more by cost factors than any broad-based demand recovery.

Scrap markets remain firm but fragmented. Imported scrap activity continues to be constrained by high landed costs and supply disruptions, while domestic prices have stabilised at elevated levels, with mixed regional trends. Buyers are increasingly resisting higher offers, leading to slower transaction activity despite firm underlying costs.

Aluminium markets continue to reflect supply-side pressures. LME aluminium is holding near $3,450-3,500/t levels, supported by ongoing disruptions to Middle East supply chains and declining inventories. At the same time, physical demand remains mixed, with Indian markets facing tight scrap availability and logistical constraints, particularly for imported material.

A weaker rupee near 95 against the dollar is further increasing procurement costs for Indian mills and smelters, adding to overall cost pressures.

The market is now entering a phase of transition. Early signs of supply normalisation are emerging through improving tanker movements and easing logistics constraints, while freight softness, weak export activity and cautious buying continue to point to underlying demand weakness. This suggests that while prices may remain supported in the near term, any sustained upside will depend on a recovery in trade flows and end-use demand rather than continued supply disruptions.