Hidden Crisis: How Strait of Hormuz Blockade Threatens India’s Copper Supplies

The ongoing US-Israel-Iran war continues to intensify and spread despite the US announcing a five-day ceasefire. It has already disrupted critical global supply chains through the Strait of Hormuz—a narrow waterway between the Persian Gulf and the Gulf of Oman—through a blockade, severely straining India's copper imports and downstream sectors.

Unlike in the case of oil and natural gas, copper's exposure to the West Asian region is indirect but profound. While the region produces little copper directly, the blockade can have serious repercussions on a host of other items. It has resulted in severe sulphur shortages, skyrocketing energy costs and shipping chaos, endangering India's copper refining and its fast-growing sectors like renewables, defence and EVs.

War's Ripple Effect on Copper

While Iran contributes a modest 1.8% (410,000 tonnes) to global copper supply —too small to cripple markets outright—the closure of the Strait of Hormuz delivers a severe blow, halting 40,000 tonnes per month of copper cathode through vital Gulf hubs like Jebel Ali. This blockade transforms a peripheral risk into a supply chokehold, stranding shipments and amplifying India's import woes. 

More critically, it triggers a "sulphur famine" because Gulf nations supply 45% of global sulphur for the manufacture of sulphuric acid, a critical input for copper smelters, and the broader copper value chain. The acid is essential for copper leaching in the African Copperbelt—the Democratic Republic of Congo and Zambia—which is estimated to account for 26% of the total copper exports. Moreover, the collapse of the Kasumbalesa Bridge on March 3, 2026 compounded this, slashing one-third of DRC's refined copper shipments.

This paralysis hits India hard. As the world's second-largest refined copper importer, India relies on imported concentrates to the extent of 91-97%, with Vedanta's Chairman Anil Agarwal lamenting 95% import reliance amid the war. Lower domestic output, post-Tuticorin smelter closure (shutting off 36% of the country’s capacity), means leaning on Hindalco and the nascent Adani Kutch (0.5M tonnes/year). However, sulphur shortages spike leaching costs worldwide.

Energy costs feeding into smelting: 

India imports around 88% of its crude oil, nearly half of which comes from the Gulf. As a result, any surge in oil prices translates directly to higher import bills, currency pressures, a bigger current account deficit and rising inflation. Since copper smelting is highly energy-intensive, rising energy costs directly increase the cost of every tonne of copper produced or processed. 

The Hormuz risks have already driven oil to more than $100/barrel (Brent crude was trading at $107 on March 31, inflating the production cost of copper, which is likely to have an adverse impact on India. If the Strait of Hormuz remains closed for more than 30 days, analysts at major investment banks suggest copper could test the $15,000 per tonne level—a price point that would likely trigger significant demand destruction in the construction and consumer electronics sectors. Others like Goldman Sachs predict $10,000 to $12,000 per tonne. 

A weaker rupee compounds the copper import problem because the red metal, like crude, is also priced in dollars. A weaker rupee inflates every copper import bill proportionally. For companies with external commercial borrowings or foreign currency liabilities, rupee volatility also increases hedging and repayment risks.

Freight disruption challenges:

Freight disruptions force copper shipments to reroute around Africa's Cape of Good Hope. This adds about 30% to logistics costs and delays scrap imports from UAE and Saudi Arabia—key for India's secondary recycling. The widening conflict has already hit transportation costs, pushing up input prices, and adding to inflation, which eventually squeezes margins of copper products. 

In addition, US sanctions pose a growing risk, such as past fines on Indian firms trading with Iran. These threats were linked to India’s building of the Chabahar port.

Copper powers India's most strategic industries, from renewables and EVs to defence electronics and infrastructure. Surging prices now inflate costs for wiring, components, and cabling nationwide, squeezing margins and stalling growth. Copper scarcity now imperils India's solar, wind, and EV ambitions—cornerstones of its 2070 net-zero pledge. With 95% import dependence, the nation faces brutal exposure to global price swings and geopolitical shocks.

It is precisely this strategic dependence that makes the current crisis so consequential. Copper demand had surged 13% in FY2023-24, fuelled by infrastructure and electrification surges, with analysts eyeing a 6% plus CAGR through 2031. Yet the Hormuz blockade lays bare the fragility: sudden supply squeezes and cost spikes now threaten this trajectory, exposing deep cracks in India's industrial and energy-transition ambitions. 

The Strategic Wake-Up Call

The March 2026 Strait of Hormuz crisis lays bare a bitter irony:  The country’s "green" revolution—renewables, EVs, and net-zero by 2070—rests perilously on "brown" logistics like secure shipping routes and sulphur flows from the Gulf of Hormuz.

But the war has exposed how dangerously slow India's supply diversification has been. Agarwal called on the government to empower entrepreneurs and expedite resource production at home to reduce dependency on volatile global markets: "Mother Earth has given us the best geology. Now is the time, with this positive government, to give entrepreneurs freedom.” 

 [The author is an economist and adjunct professor at the Institute of Public Administration, Hyderabad. Views expressed here are his personal]