How is the Iran crisis affecting the metals and; energy ecosystems - A 360-degree view

• Chinese steel exports to ME face serious threat, Indian cargoes stuck
  
  
• The Middle East supplies around 30% of India's aluminium scrap imports
  
  

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:

Steel

The escalation between the US, Iran, and Israel is driving a "cost-push" cycle in steel pricing. Prolonged conflict will likely see energy and freight costs become the dominant price drivers. Europe, heavily reliant on LNG imports, remains the most vulnerable to these rising input costs and a potential resurgence of inflation. Moreover, EU demand is softening under the weight of surging energy costs and persistent inflation, which are dampening the automotive and industrial sectors

China exports around 25-30 million tonnes (mnt) of steel to the Middle East region annually. Any disruption in trade routes could affect the destination of these cargoes.

Following a quiet return from the Lunar New Year, China faces disrupted export routes to the Middle East. This blockage increases supply pressure on China's domestic market. To manage this surplus, Chinese mills may pivot toward Southeast Asia, supplying semi-finished steel to regions that can no longer procure materials from Iran.

Export cargoes from Indian mills are currently stuck either at ports or at plant locations. India typically exports around 60-70,000 t per month to the Middle East, but no fresh bookings have been reported to any destination so far, largely due to uncertainty in freight rates and vessel availability.

Ferrous scrap

Shredded scrap prices, heard around $365-380/t CFR South Asia in the last week of February, have moved up to about $390-400/t CFR across major South Asian buying markets over the past week.

Trades for EU-origin shredded to Port Qasim (Pakistan) have been reported at $388-395/t CFR, with some suppliers quoting offers above $405/t. Market participants say the rise is partly linked to a pause in shipments from a major UAE-based supplier, tightening regional availability. The UAE was Pakistan's largest scrap supplier in 2025, exporting over 1 mnt of ferrous scrap during the year.

Much of the increase is being driven by higher freight costs and shipping disruptions tied to Gulf tensions, along with rising bunker fuel prices. Some carriers have adjusted regular routes to avoid risk zones, which has lengthened voyage times and reduced vessel availability. At the same time, higher oil and energy prices have pushed bunker fuel costs higher, adding pressure to freight rates.

In India, the imported scrap market remains uncertain. UK-origin HMS was earlier quoted around $348-350/t, with workable levels seen near $350-352/t under normal conditions. Freight circulars suggesting increases of $1,500-2,000 per container could raise landed costs by $50-70/t, especially if cargoes reroute via the Cape of Good Hope. Suppliers are reluctant to offer HMS below $360/t, while buyers at Mundra and Nhava Sheva are bidding closer to $350/t.

Across the Middle East, scrap demand is gradually rising as steelmakers expand electric arc furnace (EAF) capacity, particularly in Egypt, Saudi Arabia, and the UAE. However, local scrap generation remains limited and often lower in quality, forcing mills to rely on imported material. While the UAE market remains relatively stable due to greater use of iron ore and DRI, the wider region continues to depend on scrap imports from Europe, the US, and CIS, keeping supply tight and prices supported.

As of 6 March, domestic scrap prices in the Mumbai market were assessed at INR 33,700-33,800/t, marking an increase of INR 700-800/t w-o-w, according to market participants.

Rebar and billet prices surge

The uptick in scrap values follows a notable rise in finished steel prices in Mumbai. Rebar prices increased by around INR 1,500/t w-o-w, while billet offers surged by nearly INR 2,400/t during the same period, encouraging mills to resume procurement and limited restocking activities.

Energy cost volatility

Market sentiment has also been influenced by the ongoing Iran-Israel conflict, which has triggered volatility in global energy markets. Rising coal and energy costs have started supporting sponge iron prices, thereby strengthening the overall raw material complex for secondary steelmakers.

Middle East supply risks may tighten scrap availability

Industry participants noted that Iran remains a significant exporter of sponge iron across the Middle East and nearby regions. Any disruption in supply due to the conflict could affect steel production in importing countries, potentially prompting buyers to explore alternative sourcing options, including India. Additionally, imported scrap arrivals from the Middle East region may face disruptions due to the ongoing conflict, which could tighten supply and exert upward pressure on domestic scrap prices.

While domestic steel demand remains moderate, the recent cost escalation in energy and raw materials has lent support to scrap buying. Market participants expect sentiment to remain cautiously optimistic in the near term, although developments in crude oil prices and potential disruptions in Middle Eastern raw material flows will remain key factors to watch.

Semis & IF finished long steel

In metallics, India's sponge iron (DRI) prices increased by over INR 2,000/t across major regions, supported by improved buying activity during the pre- and post-festive period. The sharp rise in South African thermal coal prices, up nearly 10%, remained a key driver of the uptrend as higher input costs significantly increased production expenses for sponge iron manufacturers.

Stainless steel

Escalating geopolitical tensions in the Middle East may create short-term disruptions for India's stainless steel industry, particularly in export logistics. Jindal Stainless has flagged possible delays in shipments to the region due to longer transit routes and restricted airspaces amid the conflict. While the Middle East constitutes a relatively small share of India's stainless steel exports, supply chain disruptions could still impact trade flows. In 2025, India exported around 11,000 t of finished stainless steel flats and nearly 24,000 t of finished longs to the United Arab Emirates. Prolonged tensions could also lead to higher freight costs, logistical uncertainties, and volatility in energy prices, indirectly increasing production costs for Indian stainless steel producers.

Non-Ferrous Metals

Aluminium

The crisis has injected fresh volatility into aluminium markets, pushing prices to their highest levels since January and exposing structural supply risks centred on the Gulf.

LME aluminium is trading at $3,345/t, up by 6% from last week. On the other hand, inventories at LME registered warehouses are constantly decreasing.

The Middle East produces 6.85 mnt of primary aluminium annually, about 8% of global output, most of which is exported. With China near capacity and global inventories below the five-year average, closure of the Strait of Hormuz could sharply disrupt flows to Europe, Japan, South Korea, and the US, pushing premiums higher.

Primary aluminium producers in India are facing limited direct disruption from the ongoing US-Iran conflict, as most smelters rely on domestic power and key raw materials are largely sourced outside the GCC. Strong domestic demand and reduced imports from the Middle East could even benefit primary producers. The Middle East supplied nearly 30% of India's aluminium ingot imports last year.

However, indirect cost pressures are emerging. Indian gas supplies to industrial users may be curtailed, coal prices have risen due to freight constraints, and pet coke availability could be affected if refineries face disruptions, potentially increasing production costs.

Domestic primary producers have already raised aluminium prices by up to INR 20,000/t. India's domestic average premiums for aluminium are currently around $300-$320/t above LME cash.

For downstream aluminium producers, pressures are more acute. Over the past 10 days, IE07 primary aluminium ingot prices have risen -INR 30-35/kg, and LNG restrictions limit supply to 80% of contracted quantities. Many producers may need to shift to FO, which could raise finished material costs by 20-25%.

A major aluminium extrusion manufacturer said that export disruptions are also significant. With the UAE port closed, nearly 70% of Middle East sales for some producers are impacted, further tightening the market.

Aluminium scrap imports

Logistics disruptions are adding pressure to the aluminium market. Operations at Jebel Ali Port have been temporarily halted, causing uncertainty for Gulf cargo. Freight and insurance costs are surging, with war-risk premiums up 100-200% and emergency charges of $2,000-3,000 per container. Shipping lines are introducing additional surcharges for fuel and conflict zones.

India is already feeling the impact. In 2025, the Middle East supplied nearly 25% of aluminium scrap out of the total 1.92 mnt.

UAE suppliers have temporarily halted scrap offers due to temporary port closure, while other regions remain slow amid rising LME prices and higher freight.

A UAE-based scrap supplier informed BigMint they expect the port to start minimal operations by the next week-mid.

Copper

India's scrap import reliance

India's reliance on imported copper scrap could expose the domestic market to secondary risks amid rising tensions around the Strait of Hormuz. In 2025, India imported around 430,000 t of copper scrap, with nearly 85,000 t sourced from the Middle East, particularly from the United Arab Emirates and Saudi Arabia. Any disruption to shipping routes in the Gulf could therefore affect scrap inflows to India.

In addition, India imported around 181,300 t of finished copper long products - including wires, bars, rods, and profiles - with nearly 115,000 t originating from the United Arab Emirates, highlighting the country's significant dependence on Gulf trade flows for semi-finished copper products as well.

Logistics costs have already started to rise. Market participants reported that war-risk insurance premiums have increased by 100-200%, while emergency war service charges of $2,000-3,000 per container have emerged.

Some vessels carrying scrap cargoes have reportedly remained idle despite being loaded, as shipping companies reassess risk levels in the region. In addition, potential rerouting of vessels could increase transit times, tightening near-term scrap availability.

For India's secondary copper sector, which heavily depends on imported scrap for feedstock, prolonged disruptions could lead to temporary supply shortages, higher scrap premiums, and cautious buying by recyclers.

Coal & Energy

South African thermal coal prices at Indian ports surged sharply w-o-w amid rising export offers, rising freights, and geopolitical tensions in the Middle East, which have disrupted global energy markets. Exw-Paradip RB2 (5,500 NAR) increased to INR 11,700/t and RB3 (4,800 NAR) to INR 10,400/t, up by around INR 1,100-1,200/t w-o-w. At Vizag, RB2 rose to INR 11,600/t and RB3 to INR 10,300/t, reflecting strong cost push from the seaborne market. Prices have climbed to a three-year high.

Market participants noted that firm demand from Europe and China for South African coal amid gas and oil supply disruptions supported export prices and tightened spot availability.

With Indonesian imported coal prices, too, rising to a 3-year high, the pressure on costs for users across the industrial spectrum is increasing.

Pet coke

Imported pet coke offers have risen sharply. Sellers continued to quote high levels, but buyers were waiting for offers to soften, as most end-users were well stocked after purchasing at lower prices two months ago. Additionally, domestic coal remained available at more competitive rates, further reducing buying interest at current pet coke offer levels.

Logistics

Freight sentiment remains firm amid ongoing geopolitical tensions and rising bunker prices, with Very Low Sulphur Fuel Oil (VLSFO) expected to approach record high. However, the duration of the uptrend remains uncertain. Dry bulk iron ore freight rates increased w-o-w, although trading activity remained relatively slow, with only a few fixtures concluded at higher levels. Meanwhile, firmer bunker prices continued to lend support to freight levels.