The Impact of the US-Iran War on the Non-Ferrous Metals Industry

 The military conflict between the United States and Iran, which broke out in late February 2026, has sent shockwaves through the global non-ferrous metals industry, triggering sharp fluctuations in prices, disrupting supply chains, and reshaping market expectations. As a region with abundant mineral resources and a key shipping hub, the Middle East’s geopolitical turmoil has far-reaching implications for both precious and industrial non-ferrous metals, affecting every link from production and transportation to pricing and investment decisions.

Precious metals, long regarded as a safe haven in times of crisis, have been the biggest beneficiaries of the conflict. Driven by surging geopolitical risk aversion, spot gold and silver prices have soared sharply since the escalation of tensions. Spot gold once surged more than 4% intraday, approaching the $5,400 per ounce mark, while spot silver broke through $96 per ounce, hitting a record high. This rally is supported by multiple factors: massive capital outflow from risky assets into precious metals, weakened U.S. dollar credit amid rising U.S. fiscal risks, and elevated global inflation expectations driven by soaring oil prices, which reduce the opportunity cost of holding non-interest-bearing gold. In the medium to long term, the continuous global central bank gold purchasing trend and the diversification of the international monetary system will further underpin the upward momentum of precious metal prices.

For industrial non-ferrous metals, the impact of the conflict is more complex, mainly focusing on supply chain disruptions and rising production costs. Iran, a country rich in mineral resources with proven reserves of 550 billion tons covering 81 types of minerals, plays a non-negligible role in the global supply of metals such as copper, aluminum, lithium, and nickel. The conflict has disrupted Iran’s metal production and export capacity, with the core bottleneck being the blockage of transportation channels rather than direct damage to mines. The Strait of Hormuz, a vital waterway through which 20% of global crude oil trade passes, is also crucial for Iran’s metal transportation—any disruption or blockade of the strait will cut off the export of Iranian non-ferrous metals, as 90% of Iran’s aluminum products and raw materials are transported through this strait.

Aluminum and copper, two key industrial metals, have been significantly affected in different ways. Aluminum, an energy-intensive industry, is facing a double blow: direct production disruptions due to potential damage to power and industrial facilities, and raw material shortages as 80% of Iran’s alumina relies on imports mainly from India. If the conflict persists, about 80% of Iran’s aluminum smelting capacity may stall due to raw material shortages, reducing global primary aluminum supply by nearly 600,000 tons per year and pushing up global aluminum prices amid low global inventories. Copper, on the other hand, has relatively stronger resilience in production, but its export is fully dependent on the Strait of Hormuz, leading to soaring shipping costs and higher onshore costs; coupled with rising energy prices pushing up smelting costs, copper prices have seen a short-term "pulse-like rise" driven by market sentiment.

Beyond direct supply and price impacts, the US-Iran conflict has also reshaped the pricing logic of the non-ferrous metals industry. Geopolitical risks have added a "security premium" to non-ferrous metals, with industrial metals such as copper and rare earths, which are irreplaceable in new energy and national defense, being revalued for their strategic value. This means that metal prices are no longer solely determined by supply and demand fundamentals but also by the market’s willingness to pay for supply chain security. In addition, the conflict has amplified the resonance effect of multiple factors—including the Federal Reserve’s interest rate cut cycle, the green energy transition’s demand for metals, and global strategic stockpiling—which has further intensified price volatility.

Looking ahead, the trajectory of the non-ferrous metals industry will largely depend on the intensity and duration of the US-Iran conflict, especially the smooth operation of the Strait of Hormuz and the recovery of Iran’s production capacity. While short-term price fluctuations are inevitable, the long-term impact will be shaped by the interplay of geopolitical patterns, energy prices, and industrial demand. For industry participants, closely monitoring geopolitical developments and adjusting strategies in response to supply chain risks and price volatility will be crucial to navigating this uncertain market environment.