Recently, the eyes of the world have been fixed on that narrow strait.
On February 28, 2026, when the bombs of the United States and Israel fell on Iranian soil and Tehran's missiles pierced the night sky in retaliation, a crazy decision was put on the table: Iran announced that it would blockade the Strait of Hormuz. Don't underestimate this statement. This is not like setting up a checkpoint at the entrance of a residential area to check health codes; it's like directly strangling the neck of the global energy industry. How narrow is the Strait of Hormuz? At its narrowest point, you can clearly see the people on the ships on the other side if you stand here. But it is precisely this waterway that shoulders one-third of the world's seaborne oil and one-fifth of the liquefied natural gas transportation tasks.
As upstream raw materials for the cable industry, copper, aluminum, and those high-molecular materials. Let's start with copper. It has a strong financial attribute, and people with spare money are all keeping an eye on it. When this conflict broke out, the first reaction of funds was to seek refuge in gold, and they also pulled up copper along the way. Just after the Spring Festival in China, the copper in the warehouses was piled up like small mountains.
The latest data is terrifying - the social inventory suddenly increased by 165,000 tons! The factories that make cables have not yet fully resumed operations, and the machines have not yet fully started up. Now let's look at aluminum. The major players in the Middle East, such as Iran, the United Arab Emirates, and Saudi Arabia, have a combined electrolytic aluminum production capacity of over 7 million tons! Especially Iran itself, it can produce nearly 800,000 tons a year. But these countries have a fatal flaw: the raw material bauxite for aluminum smelting has to be imported, and the finished aluminum ingots have to be exported. If the Strait of Hormuz is really blocked, it would mean that raw materials cannot come in and finished products cannot go out, and the factories would be paralyzed on the spot.
What's even more fatal? The global inventory of electrolytic aluminum in warehouses is only enough for the world to consume for 5.6 days! What does 5.6 days mean? It's like you're starving and don't know where your next meal is coming from. The most tragic and direct impact would be on high-molecular materials, that is, the plastic stuff we usually call PP (polypropylene) and PE (polyethylene). The first blow is on the cost. Iran is a major oil producer. Once the war starts, oil prices will soar. The raw material for making plastics is naphtha, which is refined from oil. There's a saying in the industry that's very straightforward: for every $10 increase in oil prices, the cost of plastic will increase by several hundred yuan per ton. This is an unavoidable hard cost.
The second blow is on supply. You may not know that Iran is an important supplier of plastics to China. Especially for high-density polyethylene (LDPE), the material used for plastic bags and factory wrapping films, the amount we imported from Iran last year accounted for 14% of our total imports! The data from the General Administration of Customs is in black and white. Caixin Futures also reminds us that a 9% share of polyethylene imports will definitely boost market prices in the short term.
The third blow is on freight and courage. Who would dare to send ships to the war zone now? Insurance premiums will multiply several times, and freight rates will follow suit, all of which will be included in the landed price. This is called risk premium.
Looking at the situation from a longer-term perspective, this conflict may not just be a passing breeze; it could permanently alter the pricing rules for these commodities. In the case of copper, although it is currently weighed down by inventory, the situation looks completely different when viewed over several years. The world's copper mines are being depleted, and supply is approaching its peak, possibly even entering a period of negative growth. But what about demand? The construction of AI computing centers and the transformation of power grids are all major consumers of copper. Both JPMorgan Chase and Guojin Securities predict that the copper shortage will only increase in the coming years. This is like a pool that is about to dry up, with the outflow decreasing while the buckets used to collect water are getting larger and larger.
The logic behind aluminum is even more reminiscent of a planned economy. Domestic electrolytic aluminum production capacity has long been capped, with a ceiling that no one can surpass. New overseas projects are also lagging behind. But what about demand? Photovoltaic frames and new energy vehicles all require aluminum. A friend from Industrial Securities directly used the term "value revaluation," meaning that aluminum can no longer be regarded as an ordinary metal; it has a "supply dividend."
Ultimately, the smoke of war in the Middle East has merely revealed a harsh truth in the post-globalization era: geopolitics is no longer an optional variable in economists' models; it has deeply embedded itself in the price genes of every commodity. The waves in the Strait of Hormuz will eventually become ripples in our lives, but for some, it will be a tempest by the time they notice. The situation is changing rapidly. If oil prices stabilize in the future, this disturbance will pass. But in today's security-first world, we all need to learn to adapt and do business amid the sounds of gunfire.
