The escalation of conflict in the Middle East in early 2026 has moved beyond an energy-market issue and is affecting global metals and mining supply chains. The closure of the Strait of Hormuz, damage to industrial facilities, and suspension of Persian Gulf operations by shipping companies including Maersk and Hapag-Lloyd have tightened logistics for raw materials. Mining companies and metal producers are reporting higher costs, supply uncertainty and increased operational risk as routes shorten and freight capacity becomes constrained.
Middle East-linked industrial flows include sulphur, liquefied natural gas (LNG), petroleum products and chemical feedstocks. These inputs support mineral processing, acid production and energy-intensive industrial operations. Industry estimates indicate about 50% of the world’s seaborne sulphur supply is exposed to disruption.
Industrial inputs: sulphur exposure and acid-linked processing
With sulphur shipments under pressure, sectors dependent on sulphur-based processing face immediate constraints. Nickel refining, fertilizer production and copper extraction rely on sulphuric acid as a key component. The disruption also highlights how mineral output is tied to supporting industrial materials sourced from geopolitically sensitive regions.
Transportation and fuel markets are also tightening. Traffic through the Strait of Hormuz has fallen sharply, while more than 110 million barrels of oil are reportedly held in floating storage. Regional producers have curtailed about 11 million barrels per day of oil output, reducing available energy supplies.
For mining operations, higher fuel and logistics costs flow through the value chain. Diesel, marine bunker fuel and transportation services have risen in price, increasing expenses from mine-site haulage to concentrate exports and smelter deliveries. As logistics become more expensive and less predictable, producers face pressure on margins and working capital requirements.
Aluminium output losses across Gulf facilities
The aluminium market is among the most exposed segments of industrial metals. Forecasts for 2026 indicate the Middle East could lose up to 3.5 million tonnes of aluminium production due to power disruptions, operational shutdowns, labour unrest and damage to industrial infrastructure. Facilities including EGA Al Taweelah in the United Arab Emirates and ALBA in Bahrain have been affected.
The resulting supply gap is expected to be difficult to replace quickly. Even with output increases targeted by producers in China and Indonesia, alternative suppliers are unlikely to compensate fast enough for the lost volumes. Global aluminium supply is therefore expected to decline by nearly 3% this year.
Steel production falls as pellets and DRI movements tighten
Steelmaking is facing both supply disruptions and cost inflation. Crude steel production across the Middle East fell 33% in March, while Iranian steel mill output dropped by about 55%. Disruptions affecting pellet movement and direct-reduced iron (DRI) deliveries are pushing steelmakers toward alternative feedstocks such as scrap metal and billets.
The shift increases competition for available materials across the sector. Rising prices for iron ore and metallurgical coal have lifted blast furnace operating costs by nearly 10% since the start of the year. Electric arc furnace producers have also seen scrap costs rise by between 10% and 15%.
Copper risk runs through Gulf acid imports
Copper supply has so far avoided major direct losses tied to Iranian production reductions and Gulf exports of semi-finished copper products. Those changes account for less than 1% of global copper supply, limiting immediate impacts on overall availability. The more significant exposure relates to sulphuric acid availability used in copper production.
The Democratic Republic of Congo (DRC) Copperbelt depends on Gulf suppliers for more than 90% of its acid imports. Spot sulphuric acid prices have risen to between US$1,000 and US$1,400 per tonne, raising operating costs for smaller producers and firms reliant on imported acid. If prices remain elevated, growth in key copper regions could face additional pressure.
Nickel exposure links sulphur demand to HPAL battery production
The nickel impact extends into battery supply chains rather than only stainless-steel markets. Indonesia’s High-Pressure Acid Leach (HPAL) sector produces battery-grade nickel for electric vehicle applications and is among the largest consumers of sulphur globally. More than 75% of Indonesia’s granular sulphur imports originated from the Middle East in 2025.
Because HPAL projects are used to produce nickel chemicals for electric vehicle batteries, interruptions can affect downstream manufacturing connected to the energy transition. The dependency ties geopolitical disruptions directly to processing capacity that supports battery-related nickel demand.
Zinc concentrate flows strain Chinese treatment charges
Zinc and lead markets are being affected through freight constraints and concentrate shipment disruptions. Iran supplies zinc concentrate to China, accounting for more than 5% of Chinese zinc concentrate imports in 2025. Even partial interruptions increase strain on a market already described as tight for concentrates.
Treatment charges in China have fallen into negative territory as supply conditions tighten. This reflects an imbalance between concentrate availability and smelting demand that can quickly influence pricing across zinc-linked markets.
Easing global demand expectations alongside higher input costs
The conflict is also weighing on broader economic conditions that affect metals demand outlooks. Industry analysts revised global GDP growth forecasts downward from 2.5% to 2.3%, citing rising inflation, delayed interest-rate cuts and a stronger U.S. dollar. Metals markets face a combination of higher input costs alongside weaker industrial demand expectations.
The risk profile for mining operations has broadened beyond mineral reserves or mine sites alone. Vulnerability now includes sulphur supply chains, acid production capacity, fuel availability, shipping routes, port infrastructure and energy systems supporting processing plants.
Mines with secure domestic supply networks and vertically integrated operations are described as likely to show greater resilience compared with producers dependent on long international shipping routes or concentrated sources of industrial feedstocks. The exposure pattern remains tied to how industrial inputs move through ports, freight corridors and regional trade channels.
Energy transition metals remain dependent on fuel, ports and trade corridors
The ongoing conflict has highlighted structural dependencies within the energy-transition economy for metals including copper, nickel, zinc and aluminium. Production remains linked to traditional industrial systems built around fuel supply, shipping lanes, ports, sulphur availability and politically sensitive trade corridors.
If hostilities ease quickly, effects on inventories, freight rates, supply chains and industrial input costs are still expected not to disappear immediately based on current disruption dynamics described in early 2026 reporting.
