Report on the real effects of the Middle East crisis on aluminum, steel, copper, scrap, logistics, energy costs, and forecast scenarios through 2028

Author: Marco Arezio. Expert in the circular economy, polymer recycling, and industrial processes. Founder of the rMIX platform.

Reading time: 12 minutes

The geopolitical context updated to March 27, 2026

The metals market is facing a crisis that is no longer merely diplomatic or military. It has become a crisis of physical accessibility, logistics costs, and industrial continuity. Since the end of February 2026, the Strait of Hormuz has been substantially unusable for commercial shipping, with major maritime operators reporting extremely high extraordinary costs and vessels stranded in the Persian Gulf. For manufacturers, traders, and recyclers, this means one very specific thing: the price of raw materials can no longer be separated from the price of risk.

The crisis does not affect all metals in the same way. Aluminum is the segment showing the most direct damage, because the Middle East carries significant weight in global production and depends on Hormuz both to export metal and to import alumina and bauxite. Ferrous metals are more exposed to energy costs, Iranian semi-finished products, and logistical disruptions. Copper, by contrast, remains supported mainly by its own structural fundamentals, but it still absorbs tension through energy, transport, and macroeconomic uncertainty.

The Strait of Hormuz: when logistical risk enters the cost of metals

In industrial analysis, it is useful to move beyond the idea that Hormuz concerns only oil and gas. For those buying metals, the problem is much more concrete: vessel availability, insurance coverage, transit times, the risk of delays, the cost of tied-up capital, and delivery reliability. When a chokepoint of this importance is blocked, the system does not react only with a speculative spike, but with a widespread loss of efficiency that spreads across the entire value chain.

This transformation is particularly important for European companies. In a normal phase, the difference between the official quotation and the actual procurement cost may remain manageable. In a phase like the current one, however, the logistics premium and the risk premium become an integral part of the final price. This is what turns the Gulf crisis into a fully industrial crisis, not just a geopolitical one.

Aluminum: the metal most exposed to the Middle East crisis

Aluminum is currently the most vulnerable segment. Argus notes that the Middle East accounts for around 8-9% of global production and emphasizes that the region is heavily dependent on Hormuz for both outbound and inbound flows. Reuters has also documented a very tangible deterioration in operational continuity, with Alba forced to shut down part of its capacity and Qatalum affected by reduced activity.

The strongest signal is not coming only from LME prices, but from physical premiums. Japanese premiums for the second quarter of 2026 were set at 350-353 dollars per tonne, the highest level in eleven years, with an increase close to 80% compared with the previous quarter. This benchmark matters greatly because it shows that the market is not only afraid of a financial rise in the metal: it fears a genuine difficulty in sourcing physical units under normal cost and timing conditions.

In industrial terms, this means that converters, rolling mills, packaging manufacturers, automotive companies, and the construction sector are no longer dealing simply with a more expensive metal, but with a more uncertain metal. In everyday practice, everything changes: purchasing budgets, planning, margins, and the ability to defend delivery times to the final customer. This is where aluminum becomes the most sensitive barometer of the current Gulf crisis.

Steel and virgin ferrous materials: less direct scarcity, more supply chain pressure

In the steel sector, the picture is more complex. Argus points out that the direct impact on ferrous metals is less dramatic than for aluminum, but not irrelevant for that reason. Attention shifts from immediately lost volumes to the channels through which the damage is transmitted: energy, freight rates, insurance, delays, and the absence of Iranian semi-finished products.

Wood Mackenzie highlights that Iran exports about 4 million tonnes of finished steel per year and 7-8 million tonnes of semi-finished products, representing a significant share of the global semis trade. This point is decisive: the market is not facing a global collapse of steel, but a concrete commercial gap in billets and slabs, with effects on buyers who depended on that material to feed rolling, processing, or regional arbitrage.

In ferrous metals, therefore, the crisis is less theatrical but more insidious. It does not always appear as a sudden price jump, but rather as a gradual erosion of supply chain efficiency. For electric steelmakers, service centers, tube mills, and trading operators, this may prove even more destabilizing than a single price spike, because it forces a reconsideration of charge mix, semi-finished sources, and contractual horizons.

Ferrous scrap: the secondary material gains strategic weight

Ferrous scrap is entering a phase of renewed centrality. Even before the latest escalation, the market was showing a certain degree of strength, but the Hormuz crisis reinforces the value of everything that reduces dependence on long supply chains, imported virgin raw materials, and semi-finished products exposed to geopolitical tension. In a fragile logistics environment, local and high-quality scrap becomes more important for industrial stability.

This does not mean that scrap will rise everywhere and immediately with the same intensity. Demand remains linked to construction trends, competition from Asian steel, and the margins of electric steelmakers. But the underlying picture changes: secondary material is no longer simply a lever for cost reduction or sustainability, but a component of production security. For those who collect, sort, and prepare scrap, the technical quality of the service becomes increasingly more decisive than the mere volume handled.

Copper, zinc, and other non-ferrous metals: the effect is mainly indirect

Copper does not currently show the same vulnerability profile as aluminum. The Reuters consensus of January 2026 had already placed the expected average cash copper price at 11,975 dollars per tonne, confirming a market supported by supply constraints and robust demand linked to electrification, infrastructure, and digital technologies. The Middle East crisis is therefore grafted onto an already tight structure.

In this case, the transmission channel is less geographical and more systemic. The cost of energy, transport, market uncertainty, and even the availability of auxiliary inputs linked to mining and metallurgical supply chains all weigh on the market.

European CBAM: the geopolitical crisis meets regulatory selection

As of January 1, 2026, the CBAM entered its definitive phase, as confirmed by the European Commission. This changes a great deal for metals imported into Europe, because it adds a further level of selection: not only the delivered price matters, but also carbon intensity, documentation, and full material compliance. In a context already strained by war and logistics, this transformation makes the European market more selective and more demanding.

For aluminum and steel, the combined effect may be very strong. On the one hand, the Gulf crisis makes certain origins less reliable or more expensive; on the other hand, the CBAM narrows the range of easily usable supplies. For well-traced European secondary materials, this scenario may translate into a growing competitive advantage, especially where industrial recycling can offer consistent quality, logistical proximity, and lower exposure to external risks.

Forecast scenarios 2026-2028

The most plausible scenario, at present, remains that of a prolonged conflict with Hormuz only partially operational. This is the hypothesis that best explains the signals already visible: aluminum physical premiums at their highest in eleven years, heavy extraordinary shipping costs, and persistent tension over supply continuity. In this framework, aluminum would remain the most vulnerable metal, ferrous metals would continue to suffer costs and supply chain dysfunctions, while copper and non-ferrous metals would maintain a dynamic supported mainly by fundamentals and energy.

A de-escalation scenario within the second quarter of 2026 cannot be ruled out, but even in that case industrial normalization would be slower than diplomatic normalization. A supply chain that has already experienced “force majeure,” delays, premium increases, and contractual revisions does not immediately return to its starting point. The market would in any case continue to reward shorter supply routes, better protected contracts, and more resilient chains.

The most severe scenario remains that of a closure extended beyond twelve months. In that case aluminum would risk genuine physical scarcity, aluminum scrap and ferrous scrap would assume even greater strategic value, and the entire geography of industrial procurement would be redesigned more rapidly. For companies, it would not be only a matter of higher costs, but of access to material and the ability to maintain production.

Strategic implications for operators and companies

For importers of virgin metals, the priority is no longer simply to seek the best price, but to build a safer supply structure. This means diversifying origins, reducing dependence on individual logistics corridors, strengthening contracts, and assessing disruption risk more carefully. In a market like the current one, convenience without reliability risks quickly turning into a hidden cost.

For recyclers, scrap traders, EAF steelmakers, and foundries, the picture is different but potentially favorable. The crisis is rewarding well-prepared secondary materials, proximity flows, and documented supply chains. In this sense, the circular economy and security of supply are converging: what is recycled, local, and traceable is not only more consistent with the environmental transition, but also more useful in a world where global logistics has become less predictable.

FAQ

Which metal is the most exposed today?

Aluminum, because the Middle East accounts for about 8-9% of global production and depends heavily on Hormuz for exports and raw material imports.

Are ferrous metals experiencing the same emergency as aluminum?

No. Ferrous metals are suffering mainly from logistics, energy, and Iranian semi-finished products, rather than from an immediate global scarcity of the metal.

Why is scrap becoming more important?

Because it reduces dependence on long supply chains and on virgin inputs exposed to geopolitical shocks, while also integrating better with the new European regulatory framework.

Does the CBAM amplify the crisis?

Yes. Since January 1, 2026, the mechanism has been in its definitive phase and increases selectivity on imported iron, steel, and aluminum.

Essential sources and references

Reuters, March 26, 2026 — Hapag-Lloyd: extra weekly costs of 40-50 million dollars and commercial shipping blocked in Hormuz.

Reuters, March 26, 2026 — Japanese aluminum premiums for Q2 2026 at 350-353 $/t, the highest in 11 years.

Argus Media, March 2026 — The Middle East accounts for 8-9% of global aluminum production; ferrous metals are less directly exposed.

European Commission, January 2026 — CBAM in definitive regime from January 1, 2026.

Argus Media, March 5, 2026 — Possible aluminum targets toward 4,000 $/t in the event of a prolonged crisis.

Further reading links

- metal recycling and what is reused

- classification of non-ferrous metals according to CECA specifications

- recycling of metal scrap

- scarce raw materials and the role of recycling in strategic metals

- low-temperature technologies for metal recovery

- offers and requests for recycled metals on rMIX

Licensed image

© Reproduction Prohibited