Newsletter · · Ashutosh Agarwal

Copper Overtakes Iron Ore at BHP as Diesel and Tariffs Bite - Materials Weekly - Week of August 23, 2026

Materials weekly for the week of August 23, 2026. Copper became BHP's biggest profit driver for the first time ever, but podcasts split on whether the record price is a decade-long shortage or a tariff-driven warehouse squeeze, alongside a diesel and fertilizer crunch, a US-Canada steel deal, and a tungsten scramble.

Materials Weekly

Week of August 23, 2026: Copper Overtakes Iron Ore at BHP as Diesel and Tariffs Bite

It was a loud week for the stuff the world is actually built out of. The single cleanest signal came from BHP, the world's biggest miner: for the first time ever, copper made the company more money than iron ore. That is a genuine milestone, the metal of wires and motors has just overtaken the metal of steel as the profit engine of the largest mining house on earth. But the podcasts I listened to this week were split on what to make of it. Some see the start of a decades-long shortage; others think a big chunk of copper's record price is a temporary trick of American tariff politics that could snap back fast.

Underneath copper, three slower-burning stories kept building: a diesel and fertilizer squeeze driven by the Strait of Hormuz that just refuses to ease, a last-minute US–Canada trade scramble over steel and aluminum, and a quiet scramble for tungsten, a metal most people have never thought about that suddenly sits at the center of the US defense supply chain. Let's get into it.

TL;DR

  • Copper became BHP's #1 profit driver for the first time ever. BHP's copper-division profit jumped 48% to $18 billion, overtaking iron ore, and the new CEO says the world needs to build "a new Escondida every year for 10 years" to keep up (Morning Call; The David Lin Report).
  • But copper's record price may be part mirage. A huge slug of the world's copper has been sucked into US warehouses ahead of a possible Trump tariff, the US holds ~70% of exchange-tracked stocks while consuming only ~6% of global copper (Saxo Market Call). One trader who has bet on copper for two years warns of a "very near-term fuse about to hit the keg" (The David Lin Report).
  • Diesel is in "unprecedented" territory. The profit margin refiners earn turning crude into fuel hit an all-time high, with diesel roughly triple its normal level, as the Hormuz standoff drags on and Russia bans diesel exports (Big Digital Energy).
  • Fertilizer stays expensive and fragile. Moroccan phosphate returned to the US for the first time in five years, but analysts still expect phosphate demand to drop 50% this fall because farmers can't afford it, and prices may not fall anyway (Grain Markets and Other Stuff).
  • Steel and aluminum went down to the wire. The US and Canada raced to a deadline on a deal that could cut metal tariffs from 50% to 25% (with quotas) and auto tariffs from 25% to 15% (Balance of Power; The Canadian Investor).
  • Tungsten is the new critical-minerals star. Its price is up ~600% in a year as China chokes exports, and a US rule kicking in Jan 1, 2027 will force defense contractors to prove their tungsten didn't come from China (Unusual Whales; Stocks To Watch).
  • Lithium prices tripled, but the stocks aren't buying it. The two biggest producers just raised their demand forecasts by more than 10% of the whole industry, a move one host said the market has "missed" (Rock Stock Channel).

What's new

Copper just had its "coming of age" quarter

BHP is the world's largest miner, and this week it reported results that reframe what kind of company it now is. On Morning Call, new CEO Brandon Craig, six weeks into the job, giving his first US broadcast interview, laid it out: underlying profit up 30%, the largest annual dividend in four years, and, crucially, "copper is now the biggest earnings driver for the company, surpassing iron ore." On The David Lin Report, veteran resource investor Adrian Day put a number on it: BHP's copper profit "rose by 48%, $18 billion," and copper "overtook iron as its primary profit driver for the first time on an annual basis." For a company built on iron ore, that is a big deal.

Craig's demand math is the bull case in a nutshell. He expects the world to need about 50 million tonnes of copper a year by 2050, up from 34 million today, and, bringing it closer to home, the mining industry to add 10 million tonnes of new production by 2035. To picture what that means, he pointed at BHP's own Escondida in Chile, the single largest copper mine in the world, which produces about 1 million tonnes a year: "You'll have to produce a new Escondida every year for 10 years to be able to keep up with the demand for copper." Building even one giant new mine takes many years and rarely goes to plan; building ten is the kind of thing that keeps a price rising.

A useful reality check came from Chris Temple on The KE Report. He agreed the shortage is real, "between now and 2050… we're going to need as much copper in the world as has been mined in recorded history", but pushed back hard on the popular idea that this is an artificial-intelligence story. By his math, AI and data centers are only about 4% of copper demand: "The other 96%… is all the basic stuff, basic electrification, infrastructure, new infrastructure, rebuild infrastructure, rebuilding power grids." That matters, because a demand story built on unglamorous grid-and-construction spending is more durable than one built on an AI boom that could cool.

Diesel and the Hormuz squeeze: still tightening, not easing

Last week's spine was the collapse of the Iran ceasefire. This week it hardened into something more concrete. On Big Digital Energy, the hosts noted the June 17 truce agreement formally expired with no ceasefire either side accepts, and that President Trump has floated the extraordinary idea of declaring the Strait of Hormuz US territory, while Iran's Revolutionary Guard insists the strait will stay under "exclusive and supreme Iran control."

The market fallout is showing up most violently in diesel. A quick plain-English primer: the "crack spread" is the profit a refinery makes turning a barrel of crude oil into fuel. The benchmark measure normally sits around $20 a barrel. This week it hit an all-time high of about $72, more than triple normal, and the diesel-specific margin pushed toward $100 a barrel. Bank of America called it "a perfect summer storm," with diesel supply "materially disrupted in three of four major regions globally." Part of that is Russia, which banned diesel exports last month and has seen refineries knocked offline. Diesel, as the hosts put it, "is the absolute workhorse of the global economy", it moves trucks, trains, ships, tractors and harvesters, so this is not an abstract trading story. It feeds directly into the cost of growing and shipping food.

On AG Bull, farm-policy veteran Jim Wiesemeyer connected the dots for farmers: retail gasoline near $4 a gallon and diesel averaging about $5.40 (roughly $7 in California), both records for this time of year, "not good for Republicans going into the November 3rd elections." He also gave the cleanest one-line reason fertilizer stays expensive: the US imports 5 of the 12 million tonnes of urea, nearly 20 of 22 million tonnes of ammonia, and 6 of more than 8 million tonnes of phosphate it uses, and domestic plants are already running near 97% capacity. In other words, America cannot simply make more to cushion the blow. He also flagged a scarier possibility: repeated attacks have "convinced ship owners and insurers that the entire Black Sea grain system… is temporarily uninsurable," which is the point at which a regional port war becomes a global wheat-price shock.

Fertilizer: a small relief valve, but the pressure stays on

There was one genuinely new supply development. On Grain Markets and Other Stuff, the hosts reported that Moroccan phosphate has returned to the US market for the first time in five years, about 54,000 tonnes of triple super phosphate landed in New Orleans after a temporary lifting of the "countervailing duties" (import taxes meant to offset foreign subsidies). But the relief is small and temporary, lasting only through February 2027. Stonex analyst Josh Linville expects phosphate demand to fall by at least 50% this fall as farmers, squeezed by high costs and weak grain prices, simply apply less. And even that demand collapse may not lower prices, because global phosphate supply is "extremely tight."

The affordability damage is now being measured. A January 2026 Texas A&M study, cited on the same show, put the cumulative cost of those phosphate duties to US row-crop farmers at roughly $6.9 billion between 2021 and 2025. That's the kind of number that explains why, on AG Bull, a startup called AcreHedge is building prediction markets specifically so farmers can hedge things crop insurance won't touch, diesel, anhydrous ammonia and potash prices. When entrepreneurs build brand-new financial tools just to help farmers survive their input bills, that tells you how acute the anxiety has become.

The bigger picture on why fertilizer is a geopolitical pressure point came from the Brazil Potash interview on WTR Small-Cap Spotlight. CEO Matt Simpson noted potash has swung from $1,200 to $280 a tonne in just five years, that 80% of it is produced in only Canada, Russia and Belarus, and that the Middle East region caught up in the war supplies roughly half the world's sulfur, 40% of its urea and 12% of its potash. He also flagged a detail with direct US relevance: America imports 80–85% of its potash from Canada at zero tariff today, a supply line now sitting inside a live trade renegotiation.

Steel and aluminum: from footnote to front page

For weeks this theme was the thinnest in the sweep. This week it was a headline, because the entire US–Canada trade relationship came down to a midnight deadline. On Balance of Power, reporters described a deal taking shape that would cut the metal tariffs from 50% down to 25%, likely with quotas (a set volume allowed in at the lower rate) and different rates for different processed products, and auto tariffs from 25% to 15%. The Canadian Investor added that the tariffs at stake covered only about $20 billion of Canadian exports, roughly 5%, but hit politically sensitive places hard, naming Hamilton's steel sector and Saginaw-area aluminum in Ontario.

Former Canadian finance minister Chrystia Freeland made the argument that these tariffs hurt the country imposing them, because Canadian steel and aluminum are inputs into US factories. Her line on aluminum is worth keeping: "Aluminum is basically electricity in solid form. So the US is basically imposing a tax on electricity." She pointed to academic studies of the 2018 tariffs showing the net effect was to harm US manufacturing.

There's a sting in the tail, though. On Cost of Living, trade lawyer Barry Appleton explained that the legal order behind these tariffs (Section 338) caps the rate at 50% but contains a penalty clause: if Canada retaliates, the President can actually embargo Canadian goods at the border. Retaliation, he warned, "is not only bad economically, but there is a huge penalty clause baked in." He also gave a vivid picture of how tariffs ripple: lumber that used to flow from Canada is now backfilled by Russian lumber routed through the Baltics and Poland, more expensive, and no help to American homebuilders.

The story isn't only northern. On MexMoves, analysts noted Mexico is weighing new anti-dumping duties on steel and vehicles from China and other countries it lacks trade deals with, having already put tariffs as high as 50% on about 1,500 product categories in January. Mexico, they argued, is happy to tax Chinese steel because it protects local production and raises revenue, the US is "leaning on an open door."

Tungsten: the metal nobody talked about, suddenly everywhere

If you want the clearest example of a supply chain waking up to its dependence on China, it's tungsten, an extraordinarily hard, heat-resistant metal used in cutting tools, armor-piercing munitions, and the wiring of advanced computer chips. On the Unusual Whales tungsten roundtable, the panel laid out how China's export controls (in place since February 2025) now require case-by-case government sign-off on every order, with any hint of military use rejected. The result: Chinese exports fell about 20%, from 7,300 tonnes in the first half of 2025 to 5,800 tonnes in the first half of 2026. In Japan, where big producers like Mitsubishi and Sumitomo can't reliably get material, prices have jumped 300%, with paid-for shipments "stuck at the Chinese border."

The panel's most memorable anecdote captures the whole dynamic: when Japan tried to source tungsten powder from South Korea instead, China found out, and the next month Korea's imports of that powder collapsed from about 200 tonnes to just 2. That is what a supply chokehold looks like in practice. China controls roughly 80% of tungsten mining and dominates the processing step almost entirely.

The policy catalyst is a hard date. Both this roundtable and the Spartan Metals interview on Stocks To Watch flagged January 1, 2027, when new US Defense Department rules force contractors to trace tungsten all the way back to the mine, and stop using Chinese material. Spartan's CEO noted there has been no tungsten mining in the US since 2015, even as the price has risen roughly 600% in the past year. That gap between a legal requirement to buy American tungsten and the fact that America barely mines any is the entire investment thesis for a handful of small developers.

The debate: is copper's record real, or a tariff mirage?

This was the most interesting disagreement of the week, and it's worth sitting with because both sides are partly right.

The bull case is the structural shortage described above, BHP's "new Escondida every year," Adrian Day's "we simply don't have enough copper," and Jonathan Wellum on Thoughtful Money citing Rick Rule's estimate that the industry needs another $250 billion invested in mines over the next several years, money that simply isn't being spent fast enough. On this view, today's high price is just the market's early attempt to force new supply into existence, and copper "leads in the middle of a commodity cycle", which Day thinks we've just entered.

The skeptical case is subtler and, this week, newer. On Saxo Market Call, the hosts explained that a big part of copper's recent spike is a stockpiling scramble, not underlying demand. Because traders fear a US tariff on copper, they've been shipping metal into American warehouses to get ahead of it. The distortion is startling: the US now holds about 70% of the world's exchange-tracked copper despite consuming only about 6% of it. That left the rest of the world so short that the premium to get copper right now versus in three months spiked to $500 a tonne, a sign of "acute stress."

Josh Blanchfield of Avos Capital, on The Derivative, pushed this further. He argued the rally is really a supply story, Chile's Codelco stumbling, and a Chinese scrap-tax change that muted the usual recycled-copper response, plus a US "copper SPR" being built up in warehouses out of tariff fear. His blunt summary of why the simple bull models have been wrong: "If you have a supply-and-demand model for copper, you've been short all year." His point isn't that copper is doomed; it's that the reasons people give for the rally (AI, electrification) aren't the reasons it's actually happening, which makes the price more fragile than it looks.

And then the direct warning. Lobo Tiggre on The David Lin Report, who has named copper his top pick two years running, is telling people to be careful right now: "There's actually a copper squeeze going on again. London's getting emptied. Inventories are being moved to the US ahead of anticipated Trump announcements on copper tariffs. This happened last year." And last year, when the tariff finally came out and spared finished products like pipes, "the copper price fell off a cliff." His verdict: long-term very bullish, but near-term there is "a very near-term fuse that's about to hit the keg."

The synthesis: almost everyone agrees copper is genuinely short over the next decade. The disagreement is about the next few months, where the price is being propped up by an unusual, tariff-driven warehouse squeeze that has happened before and unwound violently before. If you only remember one nuance from this issue, make it that: the long-term copper story and the short-term copper price are, right now, two different things.

The names in play

Companies and tickers came up as discussion points in the podcasts below. This is a digest of what was said, not investment advice, and small developers are especially risky.

  • BHP, the anchor of the week: copper now its largest profit source, division earnings +48% to $18bn, biggest dividend in four years. Also took a writedown on its Canadian potash project this summer, though management still calls potash a "tier one" long-term business (Morning Call; The David Lin Report).
  • Nucor (NUE), America's largest steelmaker, trading near a record ~$300, with Q2 record steel shipments at 91% utilization, sales up 23% year-on-year, $2bn of EBITDA, and management guiding to higher Q3 earnings, described as "America's best-run steelmaker," though with notable insider selling (InvestTalk).
  • Steel Dynamics (STLD), the other quality US steel name; one host favored it over Nucor on stronger long-term returns while stressing how brutally cyclical the steel business is (InvestTalk).
  • Copper developers, Chris Temple singled out mid-tier names he considers cheap versus the shortage ahead, especially Gunnison Copper (Arizona, on private and state land, which he says could eventually supply over 10% of US needs), plus Abitibi Metals and Power Metallic (The KE Report). Jonathan Wellum pointed to Franco-Nevada (whose Cobre Panama mine may restart soon) and Ivanhoe (Thoughtful Money). Latin Metals discussed an incoming $42M option on a copper-moly project in Peru (Company Interviews).
  • Tungsten juniors, Spartan Metals (TSX: W) is positioning two US projects, Victorio in New Mexico (billed as the largest US resource, with an economic study due early Q4) and Eagle in Nevada (very high grade), explicitly to fill the post-Jan-2027 defense gap (Stocks To Watch). Blue Moon Metals and EQR were also named on the tungsten roundtable (Unusual Whales).
  • Lithium, SQM and Albemarle both raised their 2026 demand forecasts (together by ~600–700k tonnes, more than 10% of the industry). Sigma Lithium posted a record 47% margin with cash costs just over $400/tonne, though it paused mining over a regulatory issue in Brazil; Lithium Argentina generated $141M of cash flow at a $5,600/tonne cost; and PLS bought into Lithium Ionic (Rock Stock Channel, mispriced lithium; Rock Stock Channel, Sigma).
  • Electra Battery Materials (ELBM), building what it calls North America's only cobalt refinery, backed by $48M of US, Canadian and Ontario government money, with 60% of output pre-sold to LG Energy Solution; full run-rate would be ~4% of the global cobalt-sulfate market (Company Interviews).
  • Canada Nickel (CNC), secured federal approval and C$21M of funding for its Crawford nickel project (Company Interviews).
  • Fertilizer / phosphate names, Brazil Potash (GRO) is advancing a domestic mine to serve the world's largest potash importer, boosted by new Brazilian legislation (WTR Small-Cap Spotlight); First Phosphate listed on the Nasdaq to fund battery-grade phosphate (Rock Stock Channel); and Buffalo Potash pitched a modular, lower-cost approach in Saskatchewan (Stocks To Watch).

Read-throughs

A few connections worth drawing across this week's episodes:

  • Diesel is the hidden tax on food. The Hormuz standoff shows up as a record diesel crack spread (Big Digital Energy), which shows up as ~$5.40 diesel at the farm, which shows up in tractor and harvest costs, on top of a fertilizer bill that's high because a third of the world's fertilizer trade also moves through the same strait (InvestTalk). Same choke point, hitting the farmer from two directions at once.
  • The "supply chain sovereignty" trade is now one big theme, not five small ones. Cobalt (China refines ~95%), tungsten (China ~80% of mining), rare earths, and even the push to mine potash in Brazil rather than import it, every one of these episodes was, underneath, the same story: countries and companies scrambling to build supply that doesn't run through a rival. The tungsten roundtable's line applies across the board, when your industry depends on a supplier "who has been very clear about the fact that they are coming for your industry," that dependence becomes a national-security problem.
  • Tariffs cut both ways, and the market keeps learning it the hard way. Copper is being pulled into the US by tariff fear (inflating the price), while steel and aluminum tariffs are raising costs for the US factories that use them (Balance of Power) and lumber tariffs are quietly handing market share to Russian wood (Cost of Living). The same policy tool is bullish for one metal's price and bearish for another's users.
  • Watch the gap between commodity prices and mining stocks. In both copper and lithium, the metal has run far ahead of the equities, lithium's price tripled while the stocks only doubled (Rock Stock Channel). That gap means the market either expects prices to fall back, or the stocks are cheap. Which one you believe is the whole game.

What changed vs last week

  • Copper's story matured from "records amid a government-buying scramble" to a genuine corporate milestone (copper overtaking iron ore at BHP), but paired for the first time with a specific, near-term bear warning tied to the tariff-squeeze unwinding, not just the longer-run supercycle debate.
  • The Iran/Hormuz situation moved from "ceasefire collapse" to "truce formally expired," with a named US pressure campaign ("Economic Fury") and Trump floating US control of the strait, and the market impact crystallized in diesel, where the crack spread hit an all-time high.
  • Steel and aluminum jumped from the thinnest theme to a headline, driven entirely by the US–Canada deal deadline (50%→25% metals, 25%→15% autos, with quotas). Nucor and Steel Dynamics finally showed up as discussed equities, a gap I flagged last week.
  • Tungsten emerged as the critical-minerals star (price +600% year-on-year, hard Jan 1, 2027 US defense deadline), replacing last week's broader rare-earths/roundtable focus.