Newsletter · 2026-08-16 · Ashutosh Agarwal

Copper Hits Records as the Strait of Hormuz Relapses - Materials Weekly - Week of August 16, 2026

Metals, critical minerals and ag inputs for the week of August 16, 2026, drawn from podcasts published August 9-16. The Hormuz truce collapsed and dragged fertilizer, diesel and nickel with it, Washington opened a $40 billion critical-minerals checkbook, and copper's record run picked up its first serious bear case.

Materials Weekly

Week of August 16, 2026: Copper Hits Records as the Strait of Hormuz Relapses

Metals, critical minerals and ag inputs, drawn entirely from podcasts published August 9-16, 2026.

A month ago the story in this sector was a waiting game: was Iran about to sign a deal to reopen the Strait of Hormuz, the narrow shipping lane that a third of the world's seaborne fertilizer squeezes through? This week the answer arrived, and it was the wrong one. The truce that everyone celebrated in June has fallen apart. Ships are barely moving, diesel is at multi-year highs, and the fertilizer price spike that farmers thought was behind them is threatening to come back. At the same time, copper keeps printing new all-time highs, but a couple of very smart, very bearish voices showed up this week to argue it's a trap.

TL;DR

The Strait of Hormuz is effectively shut again. A June peace deal collapsed within a week; by mid-August ship traffic through the Strait is running at roughly one-tenth of normal, and war-risk insurance on a single supertanker has jumped to about eight times its peacetime cost (Economic War Room). This is the thread that ties together fertilizer, diesel and even nickel this week.
Fertilizer is the sharp end. World urea prices had fallen from over $850 a tonne back to $453; now they're at risk of spiking again. About 70% of American farmers surveyed said they can't afford all the fertilizer they need for next year's crop (Economic War Room). China has quietly banned exports not just of finished fertilizer but of the sulfuric acid needed to make it.
Diesel is quietly the tightest market of all. The profit margin refiners earn turning crude into diesel on the US Gulf Coast hit an all-time high of about $90 a barrel in late July, and Russia has gone from being a huge diesel exporter to exporting essentially none (Oil Markets, Squawk on the Street).
Copper keeps making records, new all-time monthly, weekly and daily highs, on a supply squeeze that even the bulls admit takes 15-20 years to fix. But two respected voices this week made the bear case: if the AI spending boom cracks, copper could fall hard first (In it to Win it, Soar Financially).
Washington went on a critical-minerals spending spree. On August 7 the White House announced more than $3 billion in Pentagon loan guarantees and 160-plus deals worth roughly $40 billion to rebuild US mining and processing (POLITICO Energy). The catch: the government is now backing away from the price guarantees these projects may need to survive.

What's new

The Strait of Hormuz truce fell apart, and this time it's real

The clearest telling of this came from Kevin Freeman on Economic War Room, who opened by admitting he'd rewritten the episode three times "because the facts kept changing underneath me." Here's the sequence he laid out. In late February, the US and Israel struck Iran. In early March, Iran declared the Strait of Hormuz closed and began attacking ships in the 33-mile-wide narrows. On June 18, the two sides signed a memo to end the war and reopen the lane, and markets exhaled. Then, seven days later, an Iranian drone hit a cargo ship. In early July three more vessels were struck, the US hit more than 80 targets in response, and by mid-July the naval blockade of Iranian ports was back on. Iran has again announced the Strait is closed.

The number that matters isn't the rhetoric, it's the ship count. The International Monetary Fund runs a project that literally counts vessels passing through. A normal day is 88 commercial ships. A recent count was 10. As StoneX's Josh Linville put it, "technically the Strait was open, but it was basically shut down." Freeman's sharpest point: the question isn't whether loaded ships can get out of the Gulf, it's whether any owner will send an empty ship back in when war-risk insurance costs eight times what it did in peacetime.

Why should a materials investor care about a Middle East shipping lane? Because, as Freeman walks through, "food is energy." Natural gas is 80-90% of the cost of making ammonia, which becomes urea, the world's most-used nitrogen fertilizer. Crude and gas refining produce sulfur, which makes the sulfuric acid that dissolves phosphate rock into phosphate fertilizer. Roughly 40% of the world's traded urea and 44% of its seaborne sulfur move through that one Strait, according to modeling from North Dakota State University. Close the lane and you don't just move the oil price, you move the price of the corn crop two seasons from now.

Fertilizer: the spike that came back

Follow the price. World urea went from about $400 a tonne to over $850 by April when the Strait first closed, fell back to $453 in June when the truce was signed, and is now at risk of spiking again (Economic War Room). Freeman's framing is worth keeping: "This was never a crisis. A crisis ends. This is a condition." He also flagged a deliberately aggressive move by China: in mid-March, two weeks after the Strait closed, Beijing banned exports of nitrogen and potassium blends and certain phosphates, and then also halted exports of sulfuric acid, the very chemical you'd need to make your own phosphate fertilizer. In his words, "they restricted the finished fertilizer and then restricted the chemical you need to make it yourself. That's not protecting your farmers. That's closing the exits."

On the ground, this showed up as a genuinely strange buying scramble. Fertilizer dealer Josh Linville described it on The Ag View Pitch: the manufacturers' fall pricing programs opened at 8am, "everybody was kind of lined up with it by 8:30," and the programs were pulled by lunch. "I have never seen it like this." His advice to farmers is to buy their fall nitrogen now, "80 to 90% of years, your summer purchase of UAN and anhydrous are the best price you'll have for the year," but to pair that purchase with selling some 2027 corn to protect themselves, because "doing nothing is a less speculative position than doing either the grain or the fertilizer side."

The most uncomfortable number is the one that measures affordability. Freeman cited North Dakota State's math on how many bushels of corn it takes to buy a ton of urea: the long-run average is 79 bushels; at the 2022 crisis peak it was 110; under NDSU's middle-case scenario now it's 174, and in the bad case 221, nearly three times normal. The reason 2026 hurts more than the 2022 Russia-Ukraine shock, even though urea peaked higher in dollars back then, is simple: in 2022 corn was above $7.50 a bushel, so farmers had the revenue to absorb it. Corn has been running around $4.50. That's why roughly 70% of farmers in the Farm Bureau survey said they couldn't afford what they needed.

One useful nuance to keep this honest: not everyone thinks the fertilizer panic is here-and-now. On Markets to Menus, ArrowStream's John Goodwin noted fertilizer "spiked right at the offset of this war... but has been coming back down to earth ever since," and that North American farmers who planted this spring "already had their fertilizer needs covered before this thing started." His worry is South America's planting season, not the US next spring. And on Grain Markets and Other Stuff, Joe Vaclavik made the same point, most US farmers "had fertilizer locked up before the Iran situation unfolded." So the acute pain is a 2027 story arriving on a delay, and a rest-of-world story right now.

Diesel: the quiet emergency

If fertilizer is the headline, diesel is the number that stopped several analysts cold. On Oil Markets, S&P Global's editors explained that the profit margin from turning crude into diesel, the "crack spread," hit an all-time high on the US Gulf Coast of about $90 a barrel in late July. Marathon, the largest US refiner, saw its quarterly profit quadruple to $5.1 billion; Phillips 66 called its cracks "the highest on record." The cause is a genuine three-way supply crunch: less product coming out of the Middle East, Russia's diesel exports crippled by Ukrainian drone strikes, and China holding back its own exports.

Goldman Sachs' oil strategist John Stroyven put the Russia piece starkly on Squawk on the Street: Russia used to be one of the world's biggest diesel exporters, and right now "net exports out of Russia are zero" with 70% of its refining capacity offline. His advice to clients wanting to hedge the geopolitics was telling, not to buy crude oil, but to go long European natural gas and long diesel, because that's where the real scarcity is. CIBC's Rebecca Babin added the domestic warning: US refiners are running at 96% of capacity and deferring maintenance to cash in on those fat margins, and "there will be something that breaks." She sees diesel staying above $5 a gallon through the November elections. That's a direct input cost for every farmer, trucker and steelmaker.

Europe has its own twist. On Switched On, BloombergNEF analysts described a "perfect storm" where a drought has dropped the Rhine River so low that barges can't carry full loads of fuel, sending the diesel-type "gas oil" crack in northwest Europe up 161% year-on-year to around $61-63 a barrel, and squeezing chemical giants like BASF that rely on the river for feedstock.

Nickel gets caught in the same net

Here's a connection most people miss. On The KE Report, RK Equity's Matt Fearnley explained that the Iran war created "a little bit of a sulfur problem": the Persian Gulf sulfur that never came back into the market is now shut in, and that sulfur is exactly what Indonesia's big nickel producers (the "high-pressure acid leach" plants) need to make their metal. So a Middle East shipping problem is quietly tightening the nickel market too. Fearnley also sees the wider critical-minerals space bouncing after a brutal May-July, with a genuine lithium demand signal: Chinese buyers have been drawing down inventory hard over 4-6 weeks, "indicative of much stronger demand than we were expecting," especially from energy storage.

Washington opens the checkbook on critical minerals

The other big event was a White House roundtable on August 7. POLITICO Energy's mining reporter Hannah Northey laid out the scale: more than $3 billion in fresh Pentagon loan guarantees, plus over 160 deals worth nearly $40 billion, aimed at rebuilding American mining and, crucially, processing. The Pentagon has been handed more than $100 billion of loan authority. The logic is national security: some US missile supply chains are entirely dependent on China, and Beijing has shown it will throttle exports (gallium and germanium in 2023, rare earths and magnets in 2025) to make the point.

But the sobering counterpoint came from Mining Stock Daily, whose guest noted that government money is meant to "crowd in" private capital, and it isn't happening. Wall Street "turned its back" on mining years ago, and the specialist funds that understand it are too few: "for every TechMet or Orion or RCF, we need 10 of each." Worse, the administration appears to be retreating from the one tool that might keep Western projects alive against subsidized Chinese competition, a price floor. A Department of Energy official reportedly told the industry, bluntly, "we're not here to prop you guys up." As Bloomberg Businessweek's panel put it, the real unsolved problem is "not political, it's economic": how do you keep a mine outside China open when the world price is below its cost of production (Bloomberg Businessweek)?

The debate: is copper a screaming buy or a crowded trap?

Copper made new all-time monthly, weekly and daily highs this month (The KE Report), and the bull case is genuinely powerful.

The bulls. On The David Lin Report, mining financier Frank Giustra argued "the supercycle is not coming, it's here." His numbers: a roughly 35% copper supply deficit by 2035, about 8 million tonnes, widening to a 10-million-tonne shortfall by 2040. Only about six major copper mines have been built in the last decade against roughly 24 the world needs, and it takes about 17 years to go from discovery to production (longer now that new deposits are deeper). His memorable line for why prices are climbing even as visible stockpiles rise: it's "the COVID toilet-paper moment for copper," panic hoarding. Wes Adams echoed the supply story on Commodity Culture: the giant old mines like Bingham Canyon and Grasberg are aging, and "there's simply not enough major new discoveries to replace them." And on Money, Markets & New Age Investing, Greg Weldon pointed to the physical tightness directly: copper in Western warehouses has fallen from 530,000 tonnes a few weeks ago to 220,000 (below 200,000 is "danger zone"), and the futures curve is deeply "backwardated," buyers are paying more for copper today than for delivery years out, a classic sign of shortage.

The bears. Two voices pushed back hard. On In it to Win it, John Polomny argued the AI data-center boom driving part of copper demand is a bubble bigger, as a share of the economy, than the 1999-2000 telecom build-out. If it pops, "copper might pull back" to around $4.35 a pound, roughly the middle of the industry's cost of production, before the Fed reprints money and it rallies again. His advice was to treat copper as cyclical, not buy-and-hold: "you might just want to say, I have some copper stocks that are up several hundred percent, maybe I sell them and buy them back later."

The most pointed bear case came from Bloomberg's Mike McGlone on Soar Financially. His argument is about positioning, not fundamentals: hedge funds have been net-long copper futures by about 25-30% for two years, and yet over that period copper has underperformed the S&P 500 while trading at twice its volatility. "If I've got a trader who's been long this asset for two years and is making less money than the stock market at higher volatility, what's good about that?" His warning: "all you need is a little flush" in those crowded long positions, and you'll get your chance to "buy copper around five." It's the classic reminder that a great long-term story and a good entry price are two different things.

The names in play

These are companies and tickers that specific podcast guests discussed this week.

Freeport-McMoRan repeatedly named as the large-cap way to play the copper-for-AI theme (assets at Grasberg in Indonesia, Morenci in Arizona, Cerro Verde in Peru). One guest noted the Arizona mine helpfully shields it from US copper import tariffs (Map Your Money); another is long the stock and pointed to record Q2 production at Grasberg after it solved a water problem there (The KE Report).
Mosaic the largest US phosphate producer pulled its production guidance and cut output during the sulfur/urea spike (Economic War Room).
Blue Moon Metals (TSX: MOON / Nasdaq: BMM) buying up tungsten and antimony projects across the western US to feed a Nevada hub, plus a Utah project the CEO calls "the only primary germanium mine in the world," with rock worth roughly $20,000 a tonne. Germanium prices are up 50% since March and Lockheed reportedly struggles to source it outside China (Mining Stock Daily).
Magna Mining (TSX: NICU) a polymetallic copper/nickel/PGM producer in Sudbury; turned cash-flow positive in Q2 with copper costs around $4.54 a pound against a ~$6.50 copper price. The CEO would need nickel "north of $8, ideally $9 and up" to switch on its nickel zone (The KE Report).
Lithium Ionic (TSXV: LTH) a Brazil developer that raised $30M by selling a non-core asset; management sees spodumene above $2,000 a tonne against a ~$600 cost and warns of a "violent" price reaction "when the lid pops off" the lithium market (Company Interviews).
Copper Giant announced a $31M financing with commodities trader Trafigura, tied to a new pro-mining government in Colombia (The David Lin Report).
Sunrise Energy Metals got a $400M conditional US government loan for scandium, with Washington taking a right of first refusal on the output (Mining Stock Daily).
Caterpillar not a miner, but a read-through on the data-center boom: record Q2 sales of $20.5 billion, up 24% year-on-year, on demand for generators and heavy equipment (Supply Chain Now).
Fund manager Rob Mullin, meanwhile, said nickel is "the most attractive of the base metals" for the short-to-intermediate term, prefers hard-rock lithium over the "science project" of direct lithium extraction, and rates tungsten "a green light" (Money of Mine).

Read-throughs (the connections worth remembering)

One shock, four markets. The Strait of Hormuz relapse simultaneously threatens fertilizer (urea and sulfur), diesel (Gulf and refined-product supply), nickel (Indonesian producers' sulfur), and copper sentiment. When you see a fertilizer or diesel headline this month, it's usually the same story wearing a different hat.
It's the refinery, not the mine. A recurring theme across copper, lithium, rare earths and fertilizer: the bottleneck is processing, and China owns it. China went from about 15% of global copper smelting in 2005 to 50% in 2025 (Supply Chain Now); it refines roughly 85% of the world's lithium (Company Interviews); and it accounts for about 40% of phosphate output on just 5% of the world's reserves (Economic War Room). US policy this week finally started funding the "missing middle," processing, not just mines.
Government is now a buyer, but not a backstop. Washington will lend billions and even take stakes, but it's stepping back from guaranteeing prices, which is exactly the support small Western miners need to survive Chinese price wars. That gap between "the government fired the bazooka" and "private capital joined in" is the tension to watch (Mining Stock Daily).
Concentration is the hidden risk in US ag. Beyond China: the US imports over 90% of its potash, 87% of it from Canada; four companies control about 75% of the domestic nitrogen market, and two control potash (Economic War Room). "Efficiency is wonderful right up until the day you need slack."
Watch the politics of a US cathode tariff. Physical copper traders say roughly three times a year's worth of US copper-cathode demand is already sitting in US warehouses, betting on a Section 232 tariff, while AI data-center builders lobby against one because it raises their wiring costs. If a tariff lands, it could actually push the overseas copper price down as that hoarded metal loses its reason to move (A Scrap Life).

What changed from last week

Hormuz flipped from "deal any day now" to an active blockade. Last week the framing was an imminent agreement that kept slipping; this week the truce has demonstrably collapsed, with ships at ~11% of normal traffic. This is the single biggest shift in the sector.
Fertilizer went from "nitrogen down, phosphate up" to re-spike risk. The new wrinkle is China's ban on sulfuric acid exports and the 70%-of-farmers-can't-afford-it survey.
Diesel became a specific, quantified emergency, a record $90 Gulf Coast crack spread and a Russia that now exports essentially no diesel.
Critical minerals roared back to the front page on the August 7 White House roundtable, but with a new twist: the administration is backing away from the price floors these projects may need.
Copper's record run now has a live bear case attached to it, built on crowded positioning and the fragility of the AI capex boom.
Steel trade policy shifted mechanism. The action moved to Section 301 forced-labor duties covering 60 countries, with around 15 more Section 232 cases still pending (The Loadstar).