Middle East tensions delay EU steel imports

SEATTLE (Scrap Monster): Import steel shipments to Europe face longer journey times due to re-routing while steel producers also face higher energy costs, amid widespread disruptions triggered by the conflict in the Middle East, according to market sources.

While the full scope of the impact remains uncertain, the EU steel market is closely monitoring developments, avoiding significant purchases.

Longer lead times

European buyers expect import deliveries, which previously went through the Suez Canal, will now have to be rerouted to the Cape of Good Hope, resulting in higher freight costs and longer lead times. In fact, the first ships have already used the alternative route.

Market sources estimated that steel deliveries to Europe from Asia and the Middle East might take an additional two to four weeks compared with original expectations.

“We already face problems with booking orders and making offers for import. There are a lot of uncertainties regarding both prices and delivery times,” a Northwest European trader said.

The delivery delays are critical for European buyers due to the expected tightening of import quotas on steel from July 2026. Under the new quota system, a 47% reduction in volume and a doubling of duties to 50% have been proposed. Lack of details on the country-specific quotas or any caps in the global quotas has made European importers extremely cautious on steel imports arriving in the third quarter. The delivery delays greatly increase the likelihood of exceeding the new tighter quotas.

Import steel prices in Europe are expected to rise due to higher freight costs. This, combined with rising energy costs, is likely to push European prices up as well, sources said.

“I think that freight costs in the EU will increase, and so will delivered prices. On the other hand, the exchange rate is going down, and together with sea freight costs, import prices may increase,” a trader said.

Some sources also said that the lack of slab imports from Iran could push heavy plate prices up. The majority of market participants, however, argued that the volumes in question were not significant enough to cause production issues. Alternative sources of slab are either Brazil, which had no volumes available on the spot market last week, or mills from Asia.

Exporters of steel coil from Saudi Arabia have been more active in the European market recently due to lower CO2 content in the material. Those deliveries are also expected to be affected by geopolitical tensions in the Middle East.

“With no shipments going into the Gulf, all the Asian material will go somewhere else. Exports will also be affected, especially from Saudi Arabia and the UAE,” a German distributor said.

A few market participants said that steel had already been going via the Cape of Good Hope due to earlier Houthi attacks in the Red Sea, and that the impact of rerouting may not be severe.

“The impact on logistics may not be too big, but on energy — and, as a result, on steelmaking — it could be stronger and generate price changes due to recalibration of production costs,” an Italian trader said.

Rising energy costs

The rise in energy costs is expected to have a direct impact on steel production costs in Europe. However some suggested that if the conflict is quickly resolved, the effects could be limited.

The uncertain geopolitical situation is likely to negatively influence steel demand in the EU, sources said.

“At this stage, the Iran situation is mainly an energy price shock rather than a physical steel supply disruption for Europe. Higher oil and gas prices lift production costs and import parity, so the immediate effect supports flat steel prices,” a European distributor said. “Overall, it likely raises the price floor but also limits upside — supportive for margins in the near term, but not for total steel demand.”

European steel prices began recovering at the end of 2025, and the uptrend continued in 2026 due to reduced overseas supply caused by the Carbon Border Adjustment Mechanism (CBAM) and anticipated lower quotas. Demand, in the meantime, has not recovered significantly since 2025.

McCloskey’s weekly price assessment for domestic hot-rolled coil (HRC) in Northwest Europe was EUR680/t ex-works on 27 February, up EUR60/t since the start of the year.

Courtesy: www.eurometal.net