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Copper Deficit Deepens as Hormuz Chokepoint Squeezes Global Fertilizer Supply - Materials Weekly - Week of July 26, 2026

How Materials Weekly read the tape for the week of July 26, 2026: a structural copper deficit that supply cannot answer quickly, a Strait of Hormuz chokepoint threatening global fertilizer flows, and a rare hard data point from Steel Dynamics on data-center-driven demand.

Materials Weekly

Week of July 26, 2026: Copper Deficit Deepens as Hormuz Chokepoint Squeezes Global Fertilizer Supply

Two very different clocks were ticking in this week's podcasts. One is slow: it takes a decade or more to build a copper mine or a rare-earth plant, so no amount of urgent demand can conjure supply quickly. The other is fast and frightening: the Strait of Hormuz, the narrow shipping lane off Iran, has jammed up again, and roughly a third of the world's urea (the most-traded nitrogen fertilizer) sails through it. Put those together and you get the week's mood: bullish on almost everything you dig out of the ground, and genuinely nervous about whether farmers can get fertilizer this fall.

There was also, for once, something concrete to point at in steel. Let's dig in.

TL;DR

  • Copper's story is "you can't build it fast enough." One well-followed economist called copper "a no-brainer… deficit, bullish," and the reason is almost boring: most critical metals come out of the ground as byproducts of something else, so you can't turn supply up when demand jumps Palisades Gold Radio. Copper closed the week around $6.48/lb The Contrarian Capitalist Podcast; one forecaster sees $7 by year-end Soar Financially.
  • Fertilizer is a geopolitics story now. With Hormuz disrupted, a fertilizer analyst laid out that Iran, Qatar and Saudi Arabia are three of the ten biggest urea exporters, all behind that chokepoint Wall Street Week. The scary part for 2027 isn't price, it's whether there's enough to go around: "Brazilian farmers barely half covered on nutrients" AG Bull.
  • Steel finally gave us a real number. Steel Dynamics posted $6.1B in quarterly revenue (up 33%) and pointed to tariffs, reshoring and data-center building as tailwinds, and its order backlog is up 45% Brew Markets.
  • Rare earths: the West is trying two end-runs around China's 90% grip, recycling old motors and magnets, and a new $12B US government stockpile Supercool Columbia Energy Exchange.
  • Battery metals: the future is arriving in cheaper chemistries. In China, the low-cost LFP battery hit 83% of installations, and CATL is now selling sodium-ion (which needs no lithium, nickel or cobalt) into Europe EV News Daily EV News Daily.

What's new

Copper: the supply problem, in plain terms

The clearest one-liner of the week came from economist Steve Hanke, asked about copper's outlook: "Deficit. Bullish… copper is kind of a no-brainer." His reasoning is worth understanding because it applies to a lot of these metals. Most critical minerals aren't mined on their own, they come up as byproducts when you dig for something else. So even if the copper price triples, you can't just "make more," because the supply is tied to whatever the main product is. As he put it, "the supply elasticity is pretty low… if the demand goes up, you just can't get the supply fast" Palisades Gold Radio.

On the price itself: copper rose 3.6% on the week to about $6.48 a pound, with the host framing it simply, "demand is so high and the supply is dwindling", while noting near-term weather problems in Chile and Peru The Contrarian Capitalist Podcast. Author and investor Nomi Prins pointed out something telling: while gold and silver sold off, copper "held in," hitting about $6.71/lb in May and sitting near $6.30–6.40 now. Her forecast: "we predict it will be at 7 by the year-end because there is a physical structural shortage in copper." Her explanation for why copper is a cleaner read than gold, "there are fewer ways to paper-trade copper," so the price reflects actual metal, not traders' fear Soar Financially.

Why is it so hard to just build new mines? Analyst Mark Mills gave the numbers: a copper mine costs "$10 billion, maybe more," and takes "seven years to build, that'd be fast; 10 to 15 is more common." Get three or four years and a few billion dollars in, hit a recession, and you're stuck with a half-built hole and collapsing prices. That's why, he says, mining companies buy each other first to "harvest the price spikes," and only start building when it becomes "impossible not to invest." His timing call: the big rotation into commodity stocks is "single-digit years, not single-digit months" away Wealthion.

Fertilizer: a chokepoint problem, not just a price problem

This was the week's most urgent thread. On Wall Street Week, StoneX fertilizer chief Josh Linville translated the Strait of Hormuz risk into fertilizer terms most people never think about: "About a third of the world's [urea] flows through that Strait of Hormuz. When you look at the top 10 list of global urea exporters, three of them sit behind the Strait of Hormuz, that's Iran, that's Qatar, and Saudi Arabia." Saudi Arabia is also a top-5 phosphate exporter. His summary: global nitrogen and phosphate supply-and-demand is now "extremely tight" Wall Street Week. A farm-market analyst put a round number on the whole system: roughly 25% of global fertilizer trade is exposed to the Hormuz and Red Sea disruptions, with US dealers holding some working inventory but South America "in a little bit more jeopardy" heading into its fall planting, and Russia now closing some ports over security Closing Market Report.

There's a natural-gas angle underneath all this. About half of the world's fertilizer is "artificial" nitrogen made mostly from natural gas, and one podcast noted that South Asian buyers (India, Bangladesh, Pakistan) have been scrambling for gas cargoes "specifically for the sectors of fertilizers" as Asian gas prices spiked to their highest since December 2022 Commodities Focus. That gas link is also why US fertilizer makers are winning: cheap American gas versus European gas that's "double or triple the price" creates an export arbitrage, the reason CF Industries' expected earnings jumped from $9.57 last year to about $17 this year InvestTalk.

Steel: a rare hard data point

For weeks this section has been thin. Not this week. Steel Dynamics reported a strong quarter, and the details were revealing: revenue of $6.1 billion (up 33% year-over-year), adjusted EBITDA (a common measure of operating profit) of $921 million, and a record 3.7 million tons of steel shipped, with the average selling price up $105 a ton while scrap (its main input) rose only $16. CEO Mark Millett named three tailwinds: tariffs on imported steel keeping domestic prices firm, factories being built back in the US ("reshoring"), and federal infrastructure spending. The standout stat for our purposes: the steel-fabrication order backlog is up 45% year-over-year, driven by data-center construction Brew Markets. The same episode gave us a rare aluminum read (more below).

Rare earths: two attempts to break China's grip

China controls more than 90% of rare-earth magnet supply, the magnets that make efficient electric motors for EVs, wind turbines, robots, and the hard drives inside AI data centers. This week showed two Western workarounds.

First, recycling. Cyclic Materials, founded in 2021, pulls rare-earth magnets out of dead motors, hard drives and appliances and turns them back into pure rare-earth oxides, using about 65% less carbon and 95% less water than mining, and, crucially, far faster. It shipped its first ton in 2024 and is building an Arizona plant eight times the size of its pilot, backed by Microsoft, Amazon, BMW, Hitachi and Jaguar. Founder Ahmad Garaman's demand stat: the world will need "five times more rare-earth metals" by 2035 than today, yet less than half a percent are recycled in North America and Europe Supercool.

Second, government money. On Columbia Energy Exchange, two supply-chain experts examined Washington's new "Project Vault," a $12 billion strategic critical-minerals reserve, alongside last year's $400 million Pentagon investment in MP Materials for magnets. Their honest verdict: the reserve is "a game changer on the demand side, not on the supply side", it guarantees buyers, but doesn't fix the fact that new mines take 10–17 years. They flagged a deeper problem: critical minerals are less than 1% of the S&P 500, so the West's giant private-capital machine barely touches them Columbia Energy Exchange.

Battery metals: cheaper chemistries are taking over

The battery world is shifting toward chemistries that use less of the expensive stuff. In China, LFP, a cheaper lithium battery that skips nickel and cobalt, hit 83% of all battery installations in June, and one company, CATL, holds 46% of China's power-battery market EV News Daily. Even more striking: CATL is now shipping sodium-ion batteries, which use table-salt chemistry and no lithium, nickel or cobalt at all, signing deals for grid storage in Eastern and Western Europe. Its chairman claims sodium-ion "can replace up to 40% of the battery market" EV News Daily. The read-through for battery-metal miners is double-edged: more electric vehicles overall, but a shrinking share of them needing nickel and cobalt.

The debate

Copper, structural bull, but is the timing now or later? Everyone agrees the long-term picture is a shortage. The disagreement is about the next few months. Veteran investor Lobo Tiggre made the bear-then-bull case cleanly: if the Iran war heats up, that's inflationary, which forces the Fed to slow the economy, and wars themselves destroy demand, "both… are bearish for copper. But that's near-term. The structural supply constraints are so vast" that he'd treat any sell-off as "an absolute gift." His twist: the supply side has gotten so shaky, "storms and mine shutdowns and mine floods and land movements," plus Chile "reporting less production from Codelco", that he worries he won't even get his cheap entry point Palisades Gold Radio.

Fertilizer, lock in now, or gamble on peace? Farmers face a genuinely hard call, and one podcast captured it well. The textbook move is to lock in your input costs early to remove uncertainty. But urea already "dropped back… [and is] starting to rise again," and if the war ends and Hormuz reopens, "fertilizer prices will fall once again." So do you pay up now, or bet on peace by fall? The analyst's uneasy answer: "Today is not probably the best time to lock it in, but we don't really see an end to this war either." The bigger warning was about next year: 2027 may bring a fertilizer availability problem, not just a price one, and "if we start applying less fertilizers… you start talking about reducing yields" AG Bull.

Should governments be picking winners in critical minerals? One investing podcast wrestled with the discomfort of industrial policy. The case for it: "the free market does not reward strategic needs", China restricted magnet exports a year ago and, in effect, "China is controlling our military." The case against: Argentina, the world's 8th-largest economy in 1900, protected its industries into stagnation and has defaulted nine times since. The suggested middle path, copied from South Korea and Taiwan, is to subsidize but keep fierce domestic competition and attach "sunset" conditions so the support expires Invest Like a Billionaire.

The names in play

(Companies discussed in the podcasts, context, not recommendations.)

  • Steel Dynamics, the week's steel bellwether: Q2 revenue $6.1B (+33%), $921M adjusted EBITDA, record 3.7M tons shipped, backlog +45% on data centers. Also pushing into aluminum (targeting $650M of annual EBITDA there eventually), though it lost $33M on aluminum last quarter and is fighting aluminum-scrap sourcing and tariffs as high as 50%. Shares up 40% year-to-date Brew Markets.
  • CF Industries, US nitrogen-fertilizer maker riding cheap American gas; expected earnings ~$17/share this year vs $9.57 last year, stock ~$126 from the mid-$70s at the start of the year InvestTalk.
  • MP Materials, operator of America's largest rare-earth mine (Mountain Pass, California) and recipient of a $400M Pentagon magnet investment Columbia Energy Exchange; Invest Like a Billionaire.
  • Lynas, Australian rare-earth producer whose $96M US Defense Department supply deal is now being probed by Malaysia's parliament on political grounds; it's also building a separation plant in Texas The Northern Miner Podcast; Supercool.
  • CATL, the Chinese battery giant with 46% of China's power-battery market, now exporting sodium-ion batteries to Europe EV News Daily; EV News Daily.
  • South32, its Hermosa project in Arizona (zinc plus battery-grade manganese, enough to cover all US domestic manganese demand) became the first-ever mining project fast-tracked through the federal FAST-41 permitting program, with approval in about two years The Northern Miner Podcast.
  • Smaller developers featured this week: Ecora Royalties, a copper-heavy royalty company (copper ~50% of the portfolio; base-metals royalty income grew 150% in 2025), targeting $100M of royalty income by decade-end In it to Win it; Centaurus Metals, a Brazilian sulfide-nickel developer with all-in costs of ~$4.40/lb versus $7.40/lb nickel today and a Glencore offtake deal In it to Win it; First Phosphate, a Quebec high-purity phosphate developer, funded ($50M) through to a final build decision, aiming for 2029 production Mining Stock Education. (These are small, pre-production or niche names, high risk, and none is a recommendation.)

Read-throughs

  • One conflict, three markets. The Strait of Hormuz is the single thread tying the week together, it feeds copper (via inflation and the Fed), fertilizer (urea, phosphate and the natural gas that makes nitrogen), and diesel costs for both mines and farms. One host noted Goldman Sachs sees Brent crude potentially hitting $120 in the fourth quarter if the Strait stays contested, with the US strategic oil reserve already at a 43-year low Closing Market Report.
  • AI data centers show up everywhere. They're the backbone of the long-term copper case (more electricity, more wiring), and now they're visibly moving steel too, Steel Dynamics' 45% backlog jump is being driven by data-center construction Brew Markets. They also drive rare-earth demand, since the hard drives inside them use magnets Supercool.
  • The one place policy is actively helping supply: Canadian potash. The new round of US tariffs on Canada (up to 50%, effective August 19) pointedly excludes energy and potash, a recognition that US farmers depend on Saskatchewan, which produces 100% of Canada's potash and sends about half its exports to America Wall Street Week.
  • Farm-economy stress is the demand risk under fertilizer. US corn is barely at breakeven (Dec corn ~$4.79 against a ~$4.70 cost of production), Congress is debating $12–17 billion in farm aid, and the USDA's backstop lending fund is nearly tapped out Grain Markets and Other Stuff; AG Bull. A separate study found US farmers pay 68% more for corn seed than Brazilians and roughly double for fungicides, so squeezed margins can force farmers to cut fertilizer, which then hits yields The Business of Agriculture Podcast.

What changed since last week

  • Copper's "you can't build it fast" thesis got reinforced from a new angle, last week it was framed as a "deposit problem"; this week the added wrinkle is that most of these metals are byproducts, so supply is structurally slow to respond, plus fresh Chilean production shortfalls at Codelco Palisades Gold Radio; Palisades Gold Radio.
  • Fertilizer moved from a "not much competition" story to a "chokepoint" story. Last week's angle was pricing power among suppliers; this week it's the Strait of Hormuz and a possible 2027 availability crunch Wall Street Week; AG Bull.
  • Steel and aluminum came back to life. After a near-empty week, we got a concrete earnings read (Steel Dynamics) that also, unusually, gave us a real aluminum data point, the tariff and scrap dynamics inside a producer actually expanding into it Brew Markets.
  • Battery metals got richer and more nuanced, last week's EV chatter became specific this week: LFP at 83% of Chinese installs, sodium-ion going commercial in Europe, and a credible low-cost nickel developer (Centaurus) EV News Daily; In it to Win it.
  • Rare earths shifted from "China is squeezing" to "here's what the West is actually building", recycling (Cyclic Materials) and a $12B US stockpile, with an honest caveat that the stockpile helps demand, not supply Supercool; Columbia Energy Exchange.