India prioritises gas supply as Middle East tensions ripple through metals markets – A 360-degree view

• • India prioritises gas supply for essential sectors, raising risks for gas-based steel production

• • Rising bunker fuel prices, shipping disruptions continue to push freight and raw material costs higher

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:

The Government of India has issued the Natural Gas (Supply Regulation) Order, 2026 to manage gas allocation amid supply disruptions linked to tensions affecting LNG shipments through the Strait of Hormuz. Under the order, natural gas including LNG and regasified LNG will be prioritised for essential sectors such as domestic PNG supply, transport CNG, fertilizers and LPG production. The regulation allows the government to control production, allocation, distribution and consumption of natural gas to ensure continuous supply for priority sectors during the ongoing uncertainty in global LNG shipments.

For the steel sector the order introduces a new layer of operational risk. Gasbased sponge iron and direct reduced iron plants rely heavily on LNG and regasified LNG for feedstock and heating operations. Any diversion of gas supplies toward priority sectors could reduce availability for industrial users. Industry participants say reduced gas supply could force production cuts or temporary shutdowns at some gas-based units. Mills dependent on LNG may need to shift to alternative fuels or lower operating rates until supply conditions stabilise.

Steel:

The escalation between the United States, Iran and Israel is reinforcing a cost-driven cycle in global steel markets as energy prices rise, freight rates increase and raw material costs strengthen. Europe remains particularly vulnerable because of its heavy reliance on imported LNG supplies, while rising energy costs continue to weigh on industrial demand across automotive and manufacturing sectors.

China exports roughly 25 to 30 million tonnes (mnt) of steel annually to the Middle East. Disruptions to regional shipping routes could force Chinese mills to redirect shipments to Southeast Asia or domestic markets, increasing supply pressure across alternative export destinations.

Indian steel exports to the Middle East have slowed as freight volatility and shipping risks disrupt trade flows. Cargoes already destined for Europe are increasingly being rerouted via the Cape of Good Hope, extending transit times by roughly ten to twenty days and raising freight costs sharply.

Domestic steel markets have softened slightly this week as buyers remain cautious amid freight volatility and geopolitical uncertainty. Billet prices in Raipur declined to around INR 41,850/t on 11 March, while induction furnace rebar in Mumbai remained near INR 51,500/t and sponge iron eased to roughly INR 27,050/t ex Raipur.

Ferrous scrap:

The conflict has pushed imported scrap markets across South Asia into a phase of rising prices and uncertain supply visibility. Freight disruptions and higher bunker fuel costs have tightened regional availability and increased replacement costs for mills relying on imported scrap cargoes.

Indicative prices for UK origin HMS 80:20 delivered to India are now estimated near $370/t CFR, while shredded scrap cargoes are being discussed around $390 to $395/t. Pakistani mills have been actively booking cargoes and absorbing freight increases, which has further tightened supply availability for Indian buyers.

Freight costs have risen by roughly $20 to $30/t compared with normal shipping levels as insurance premiums and vessel rerouting increase logistics costs. Some traders also report that several containers carrying cargoes from India remain stuck at sea due to disruptions across regional shipping routes.

India’s domestic ferrous scrap market remained broadly stable on 11 March. Scrap prices in the Mumbai market were heard around INR 33,900 to 34,000/t, supported by firm imported scrap offers and cautious restocking activity across secondary steel mills.

Non ferrous metals:

Aluminium:

Aluminium markets have also experienced volatility as logistics risks and shipping disruptions influence trade flows. As of 11 March 2026 LME aluminium was trading around $3,340/t while inventories at registered LME warehouses fell slightly to around 452,375 t.

Global aluminium premiums are rising as buyers negotiate higher quarterly contract levels. Japanese buyers are discussing second quarter premiums around $350/t, roughly forty percent higher than previous offers as freight disruptions and higher insurance costs support regional premiums.

In India both imported and domestic aluminium scrap markets remain firm despite cautious buying activity. Several secondary producers are operating near half capacity due to logistical disruptions and uncertainty around raw material arrivals. Imported scrap prices have reportedly increased by roughly $40 to $50/t in recent days.

Copper:

Copper markets have shown limited direct reaction to the geopolitical tensions compared with energy or aluminium markets. LME copper traded around $13,140/t on 11 March following modest gains supported by improved sentiment in China.

Market participants note that the Middle East accounts for a relatively small share of global copper supply, which limits the immediate impact of regional conflicts on copper fundamentals. The recent price movement is mainly linked to market sentiment, technical buying and expectations of stronger demand from China rather than supply disruptions.

Zinc:

Zinc markets are being influenced mainly through energy and logistics channels rather than direct supply disruptions. Domestically special high grade zinc ingot prices in India were reported around INR 334,000/t ex Delhi on 11 March.

Industry participants have raised concerns about potential LPG supply disruptions affecting galvanizing operations in India. LPG is widely used in zinc galvanizing processes to heat zinc baths that coat steel components used in telecom towers and infrastructure projects.

Coal and energy:

Energy markets remain the most direct transmission channel through which the Middle East conflict is affecting metals supply chains. South African thermal coal prices at Indian ports remained around INR 12,200/t for RB2 grade on 11 March, supported by tight portside availability and firm freight costs.

Indonesian coal prices have also strengthened in recent weeks as buyers seek alternatives to gas supplies amid concerns about LNG availability and shipping disruptions across Middle Eastern trade routes.

Freight and logistics:

Freight markets have become one of the most immediate pressure points across global commodity supply chains. Shipping companies are rerouting vessels away from conflict sensitive areas near the Strait of Hormuz and parts of the Red Sea, increasing voyage distances and reducing vessel availability.

The surge in bunker fuel costs has amplified these pressures. Singapore VLSFO prices climbed from about $515/t at the end of February to roughly $1,049/t by 11 March.

Because fuel typically accounts for up to sixty percent of vessel operating expenses, such increases are pushing freight rates higher across bulk commodity shipments including iron ore, coal and steel products.

Meanwhile, Jawaharlal Nehru Port Authority has announced waivers on ground rent, dwell time and certain storage charges for export containers stranded due to disruptions linked to the West Asia conflict. The relief measures are intended to ease financial pressure on exporters whose shipments remain stuck due to shipping delays and route uncertainties.

The move highlights the growing logistical strain on exporters as vessel rerouting and freight volatility continue to disrupt cargo flows. For metals markets these disruptions are raising landed raw material costs and increasing supply uncertainty across multiple commodities.

If tensions persist or escalate further, freight volatility, energy market fluctuations and tighter gas supplies could continue shaping price movements across global metals and energy markets in the coming weeks.