Record copper and elevated steel costs add pressure to GM's full-year outlook

Gulf oil flows exceed prewar levels as alternate routes expand

GM narrowed its full-year financial outlook during an earnings call with analysts, pointing to rising commodity prices and logistics costs as the Iran war drags on. Executives cited growing pressure from record copper prices and elevated steel prices. GM projected a $2 billion headwind for the year from commodity inflation, logistics expenses and memory-chip costs.

GM also expects an additional $1 billion to $1.5 billion in costs tied to software, supply-chain investments and U.S. production onshoring. The company said the pressures could weigh on performance into next year if commodity prices remain elevated, though it still expects a new truck launch to provide a benefit.

The cost warnings overshadowed higher quarterly profit and revenue as well as GM’s announcement of a $20 billion share-buyback plan. The automaker also plans to update its progress this week toward bringing eyes-off, hands-free automated-driving assistance to the market in 2028.

GM set that automated-driving goal last year as executives dialed back EV ambitions in the wake of regulatory rollbacks championed by President Trump.

The pressure on diesel and other operating costs is not limited to vehicle manufacturing. The U.S. Energy Information Administration reported that the average on-highway price for a gallon of diesel rose by nearly 10 cents from the prior week in the week ended Oct. 19, after three weeks of declines.

The Trump administration plans to hand out an additional $8 billion in direct payments to U.S. farmers who face losses from market disruptions and high fuel costs. The payments would come through a U.S. Agriculture Department program as farmers contend with higher diesel prices stemming from the Iran war.

Before the new program was created, the Agriculture Department estimated that direct payments to farmers would reach $44 billion this year. The latest payment plan is structured similarly to a $12 billion program announced in December. That money was disbursed earlier this year to address crop-export losses from President Trump’s trade war with China.

American Farm Bureau Federation President Zippy Duvall said, “We appreciate President Trump and [USDA] Secretary Rollins recognizing that higher diesel prices have squeezed farmers’ bottom lines.”

At the same time, Persian Gulf oil exports have surpassed prewar levels as an improvised shipping system under U.S. protection helps tankers move oil through a wave of Iranian attacks in the Strait of Hormuz.

Kpler said Middle East oil flows, including shipments through Hormuz and alternative routes across the region, averaged more than 24 million barrels a day in the week through Oct. 18, surpassing the prewar level of 23.3 million barrels a day. In September, about 40% of the non-Iranian crude shipped out of the Gulf bypassed the strait, compared with 17% before the war.

Pipelines across Saudi Arabia and the United Arab Emirates are also moving oil along different routes as tankers continue using the improvised system through the strait.

Goldman Sachs’ June forecast projected that Persian Gulf exports could return to prewar levels by late July; Kpler now reports that broader Middle East oil flows have moved above the prewar benchmark.