Supply risks persist even as easing LPG flows offer limited relief to Indian markets

• Brent at $113/bbl as conflict risks and infrastructure disruptions continue
• LPG supply improves in India, but cost pressures and demand risks remain

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 steel, aluminium and energy supply chains:

Attacks on industrial and energy infrastructure across the Middle East continue to disrupt metals and energy supply chains, with damage reported at key steel and aluminium facilities, according to media reports and previous BigMint analysis.

Air strikes on major Iranian steelmakers have affected production units and supporting infrastructure, while threats of further retaliatory action across the Gulf keep regional capacity at risk. According to previous BigMint analysis, around 16 mnt of crude steel capacity across key Middle East facilities remains exposed to potential disruption.

Aluminium supply chains also remain vulnerable. Disruptions affecting major producers, including facilities in the UAE, have reinforced supply concerns in a region that accounts for roughly 9% of global aluminium output.

These risks continue to feed into energy markets. Brent crude is holding near $113/bbl as supply concerns persist alongside ongoing disruption to shipping routes through the Strait of Hormuz.

At the same time, there are early signs of easing in India’s gas supply situation. Increased tanker arrivals have improved LPG availability in recent days, helping stabilise domestic supply conditions after earlier disruptions.

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.

Shipping markets remain volatile. Prices of very low sulphur fuel oil in Singapore have rebounded to around $877/t after falling sharply in recent sessions, reflecting continued uncertainty in bunker demand and fuel cost expectations.

Recent price movements in India indicate that cost pressures are beginning to transmit into domestic markets. Billet, rebar and scrap prices have moved higher over the past week, driven by rising input and logistics costs rather than any meaningful improvement in demand.

Scrap markets are showing a clear divergence. Imported scrap activity remains subdued due to high landed costs and currency pressure, while domestic scrap prices have risen sharply, particularly in northern markets, reflecting tightening supply and disruptions in inflows from the Middle East, according to media reports.

This is beginning to create a cost floor in steel markets, where rising input costs are supporting prices despite weak demand conditions. At the same time, export activity remains constrained by disruptions along key shipping routes, including the Red Sea Suez Canal corridor and the Strait of Hormuz.

Aluminium markets are seeing a stronger price response. LME aluminium has moved higher on supply concerns, supported by disruptions affecting Middle East producers and declining inventories. However, the rally appears largely supply-driven, with physical demand remaining cautious despite higher prices.

The market is now entering a phase where supply disruptions and cost escalation are pushing prices higher, but demand remains weak. This divergence suggests that while prices may stay supported in the near term, the risk of demand destruction could limit further upside and increase volatility across steel and aluminium markets.