Strait of Hormuz Disruptions Rattle Global Steel Trade, Freight Rates Spike

SEATTLE (Scrap Monster): The global steel market is facing mounting volatility as escalating tensions in the Middle East disrupt shipping routes through the Strait of Hormuz — a critical corridor for Chinese steel exports to Gulf nations. The development, first reported by Finway, is raising concerns over supply chain stability and rising logistics costs.

Several Chinese steel exporters have halted new offers to regional buyers as freight rates surge and insurers withdraw cargo coverage. Vessel availability has tightened sharply, limiting exports to Gulf destinations. The waterway accounted for roughly 16% of China’s overseas steel shipments last year, and analysts warn that near-term volumes to the Middle East could decline significantly, potentially pressuring domestic Chinese steel prices.

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Broader repercussions may include higher freight charges, elevated insurance premiums, and increased production costs. The potential disruption of Iranian billet and slab exports — averaging 250,000 tonnes monthly in 2024 — adds further uncertainty. Meanwhile, trade flows to the EU from Saudi Arabia and the UAE could face risks despite previous exemptions from European safeguards.

Market participants also caution that extended instability could impact Red Sea transit routes, LNG supplies, DRI production economics, and raw material flows to India.