Escalating tensions in the Middle East are creating volatility in the global steel market, according to a report from Scrap Monster. The situation is disrupting shipping routes through the Strait of Hormuz, a critical corridor for moving Chinese steel to Gulf nations.

Read also: Ocean Carriers Halt Strait of Hormuz Transits Amid Regional Tensions

Several exporters based in China have stopped making new offers to buyers in the region. This follows a sharp increase in freight rates and a withdrawal of cargo insurance coverage by insurers. Vessel availability has also tightened considerably, limiting exports to Gulf destinations.

The waterway was responsible for approximately 16% of China’s overseas steel shipments the previous year. Analysts indicate that near-term export volumes to the Middle East could see a significant decline, which may put pressure on domestic steel prices within China. Broader repercussions could involve higher freight charges and elevated insurance premiums.

Further uncertainty stems from the potential disruption of exports of Iranian billet and slab, which averaged 250,000 tonnes per month in 2024. Trade flows to the European Union from Saudi Arabia and the United Arab Emirates may also face risks. Market participants warn that prolonged instability could impact additional transit routes, supplies of liquefied natural gas, and raw material flows.

Source: IndexBox Market Intelligence Platform