- Brent rebounds to $108/bbl as uncertainty around Middle East tensions drives volatility
- Shipping disruptions persist, sustaining freight costs and supply chain risks despite oil swings
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 rebounded to around $108/bbl after briefly falling below $100/bbl in the previous session, as uncertainty around ceasefire prospects and continued supply risks in the Middle East drove renewed volatility, according to media reports.
The sharp price swings reflect rapid repricing of geopolitical risk premiums, with markets reacting to both de-escalation signals and ongoing disruptions to energy flows.
Shipping activity through the Strait of Hormuz remains 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 volatile oil prices and persistently disrupted logistics is keeping underlying cost pressures elevated across commodity supply chains.
For India, the impact is visible through elevated freight rates, constrained LNG availability and continued supply chain uncertainty, even as crude prices fluctuate. The rupee remains weak near INR 94 against the US dollar, further increasing landed costs across energy, scrap and raw materials.
Steel
Steel markets remain under pressure as volatile energy prices and elevated logistics costs continue to feed into 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 shipping disruptions particularly relevant for trade flows.
However, early signs of recovery are emerging in select export segments. India’s low-grade iron ore exports have seen improved activity, with stronger buying interest from international traders supporting deal flow. An Odisha-based exporter said, “We have seen a clear improvement in buying interest compared to previous weeks. Traders are coming back with firm inquiries, which have supported deal-making.”
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), with limited trades 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. The market remains caught between tight supply conditions and weak demand, limiting price movement while keeping costs elevated for mills.
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 recent volatility, supported by improved sentiment, although market participants remain cautious amid ongoing geopolitical uncertainty.
Zinc markets continue to face pressure from LPG shortages affecting galvanizing operations, with tighter fuel availability weighing on downstream demand.
Coal and energy
Portside RB2 (5,500 NAR) thermal coal prices at Paradip have increased by around INR 1,300/t between 27 February and 25 March, or roughly 12%, driven primarily by elevated freight costs and logistics constraints. Buying activity, however, remains limited, with market participants adopting a cautious stance, which is now capping further upside despite continued cost-side support. Recent price movements indicate that the earlier uptrend has begun to lose momentum.
As a result, the market is transitioning from a freight-driven rally to a plateau phase, where weak demand is offsetting elevated input costs, keeping prices stable at higher levels.
This cost rigidity is feeding into the broader metals value chain, sustaining input pressures for sponge iron and steel producers even as finished steel demand remains subdued. At the same time, volatility in India’s short-term power market has increased, with tighter supply during peak periods pushing spot prices higher after a phase of relative stability, reflecting underlying stress in the energy system.
Freight and logistics
Freight markets remain under pressure despite fluctuations in crude prices. Shipping activity through the Strait of Hormuz remains severely restricted, while war-risk insurance premiums and vessel 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/t, reflecting sustained bunker fuel demand and risk premiums.
The interaction between volatile energy prices and persistent shipping disruptions is keeping cost pressures elevated across India’s metals supply chain. If uncertainty around the region persists and shipping flows remain constrained, freight-driven cost pressures are likely to continue shaping steel prices and margins in the near term.
Leave a Reply