The global steel market is preparing for widespread disruption following military escalation between the US and Iran in the Persian Gulf and the subsequent threat to shipping through the strait of Hormuz. Although the strait has not been formally closed, it remains a critical chokepoint and the conflict is expected to directly squeeze Middle Eastern steel supply while driving up logistics, freight rates and production costs.
Most shipowners are avoiding transit through the strait. The conflict has already sent crude futures surging by 13pc as Asian markets resumed trading, which will inevitably inflate energy-intensive production costs and freight rates. Insurance premiums for regional transit are also expected to climb sharply.
Iran's semi-finished exports
Iran's potential absence from the market poses a significant threat to the global semi-finished steel trade and supply. In 2024, Iranian exports of billets and slabs averaged approximately 250,000 t/month. The vacuum is already being felt: an Indonesian producer reportedly raised slab prices by $5/t today and hot-rolled coil (HRC) by $10/t. A Chinese trading company that supplies slab and billet to Turkey indicated that its freight costs have risen by 15-20pc, and raised its billet offer by $5/t today, with the price impact so far muted by destocking in the Chinese domestic market. Another Chinese trader said the effect on freight costs is not yet clear, but that they are sure to increase.
Semi-finished prices similarly rose in response to widespread protests in Iran in late December-early January. But sources expect Iranian offers to be suspended for the foreseeable future, after US president Donald Trump said military operations may last up to four weeks.
GCC impact
The wider Persian Gulf has gained importance in the global steel landscape in recent months, driven by capacity ramp-ups across the Gulf Co-operation Council (GCC), a relative lack of regional import restrictions, as well as exemption from key trade measures such as the EU's steel safeguards.
For Chinese and other Asian suppliers, the GCC has emerged as a primary outlet. One Chinese trading firm said today that it has suspended new offers to the Middle East, while auditing the shipment status of existing orders. The source added that shipping companies have ceased offering freight rates for routes into the Middle East and Europe, effectively halting new deals. An eastern China-based trader confirmed they have moved into a "wait-and-see" mode, citing interrupted shipments and the high likelihood of delays for cargoes already en route.
Traders in GCC countries added that closure of the strait of Hormuz could trigger force majeure claims on cargoes already booked. Several UAE buyers said dispatches scheduled for this week were put on hold, while others said no new steel deals were being concluded as suppliers reassess shipment risks. Sources also reported operational disruptions at Jebel Ali and Salalah, while most carriers have stopped calling at Dammam, although the port remains open.
The disruption also threatens a nascent trade flow into the EU. Since last year, Saudi HRC and UAE hot-dipped galvanised (HDG) have increasingly made their way to the EU market, benefiting from exemptions under the bloc's steel safeguards. Approximately 165,000t of Saudi HRC was imported into the EU in the second half of 2025, with traders expecting increased volumes this year. Similarly, the UAE supplied roughly 130,000t of HDG to the EU in the same period. The final lots of safeguard-free material from the GCC is scheduled to arrive in the first half of 2026, but the conflict puts this supply at risk.
Traders said cargoes EU-bound cargoes were loading from Saudi Arabia in both April and May, and that any logistical issues could pose some quota risk, with a new tighter mechanism — with Saudi Arabia likely to be in scope — to be implemented in July.
Some traders were also concerned whether wider escalation could effect material shipping through the Red Sea, delaying material scheduled to arrive before the new measure comes into force.
"The situation that developed over the weekend clearly makes the imports more risky, including for downstream products and that is important," a mill executive told Argus.
