Steel exports stall as supply risks persist; easing LPG flows offer limited relief in India – A 360-degree view

• • Brent near $113/bbl as infrastructure attacks and shipping risks continue

• • LPG supply improves in India, but demand risks and cost pressures persist

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.

Brent crude is holding near $113/bbl as supply concerns persist alongside ongoing disruption to shipping routes through the Strait of Hormuz. Risks are now spanning both the Strait of Hormuz and Red Sea shipping corridors, increasing the likelihood of further supply chain disruption. 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. 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. Market participants highlighted the lack of clear direction, with one shipbroker noting, “The market remains largely flat with no significant upward or downward movement observed. This has resulted in a quiet and directionless trading environment.”

The impact on steel markets is becoming more pronounced. 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 together reducing export viability, while subdued demand continues to limit mills ability to pass through rising costs.

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. This is beginning to create a cost floor in steel markets, where rising input costs are supporting prices even as demand and trade flows remain weak.

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 seen mixed movements, reflecting tightening supply and disruptions in inflows from the Middle East. At the same time, buyer resistance at elevated levels is beginning to emerge, mirroring the broader slowdown in trade activity seen in freight markets.

Aluminium markets are seeing a sharper price response. LME aluminium has surged to around $3,530/t, supported by strikes on key Middle East production facilities and declining inventories. However, the rally appears largely supply-driven, with physical demand remaining cautious despite higher prices, consistent with softer trade signals emerging across bulk shipping.

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 where supply disruptions and cost escalation are pushing prices higher, but demand and trade flows are beginning to weaken. 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.