The Impact of the Middle East Wars on the Foreign Trade Environment for Steel Imports and Exports
Release time:
2026-03-19
Middle East Conflict Roils Global Steel Trade: Logistics Disrupted, Costs Soar, and China's Export Landscape Faces Reshaping
Since the escalation of the conflict involving the United States, Israel, and Iran in late February 2026, the situation in the Middle East has remained volatile, and shipping through the Strait of Hormuz has effectively ground to a halt. As a vital global artery for energy and trade, the "closure" of this strait has exerted a profound impact on the international steel market; consequently, China's steel import and export landscape is currently facing a dual challenge: navigating immediate short-term shocks while simultaneously contending with a fundamental restructuring of the long-term market landscape.
Logistics Bottlenecks: Middle East Exports Disrupted, Million-Ton Trade Under Pressure
The Middle East represents a significant growth market for China's steel exports. Data indicates that in 2025, China's steel exports to the seven Persian Gulf nations—the UAE, Saudi Arabia, Qatar, Bahrain, Kuwait, Iran, and Iraq—exceeded 13 million tons, accounting for over 11% of China's total steel exports. However, due to disruptions to navigation through the Strait of Hormuz and operational interruptions at key ports—such as Jebel Ali—China's steel shipments to the region have experienced delays and, in some instances, complete suspension.
Although the market is actively seeking alternative routes—such as utilizing ports on the Gulf of Oman within the UAE (e.g., Fujairah and Khor Fakkan) for transshipment, or diverting cargo through Saudi Arabia's Red Sea ports—these measures will result in a significant increase in both shipping costs and transit times. Several major international shipping conglomerates have already suspended new bookings or rerouted vessels via the Cape of Good Hope, leading to a reduction in shipping capacity and a sharp surge in freight rates.
Cost Pass-Through: Rising Energy and Shipping Prices Bolster the Floor for Steel Prices.
Another impact of the conflict on the steel market stems from the cost side. Soaring international oil prices have directly driven up energy costs for steel production, as well as shipping rates for iron ore and coking coal. Although iron ore imports from Iran account for less than 0.5% of China's total—limiting the direct impact—the overall rise in maritime freight rates has nonetheless elevated the landed costs of raw materials across the entire industry. Recently, war risk premiums for shipping vessels have skyrocketed to more than 16 times their normal levels, further exacerbating trade-related costs.
Opportunities Amidst Shifting Dynamics: Supply Gaps May Spur Substitution Demand
Amidst the crisis, a restructuring of the global trade landscape is also taking shape. As the world's tenth-largest producer of crude steel, Iran is projected to export approximately 11 million tons of finished steel and steel billets in 2025, primarily targeting markets in the Middle East and Southeast Asia. Should the conflict persist and result in a disruption of Iranian supplies, a significant supply gap would emerge within its traditional markets. Analysts suggest that this shortfall may need to be filled by Chinese resources, thereby creating an indirect boost for China's exports of steel billets and plates.
Furthermore, countries such as the UAE and Saudi Arabia are already experiencing shortages in specific steel product specifications. Given that infrastructure development projects—such as Saudi Arabia's "Vision 2030"—remain undeterred, local supply constraints are likely to be exacerbated by the conflict, thereby providing price support for future Chinese steel exports.
Industry Impact: Coexistence of Short-Term Shocks and Long-Term Support
Overall, the ongoing conflict in the Middle East presents a complex scenario for China's steel industry—one characterized by short-term headwinds but long-term opportunities. In the short term, logistical disruptions have dealt a direct blow to export orders, which typically exceed one million tons per month; the 8.1% year-on-year decline in my country's steel exports during January and February already reflects a portion of this pressure. However, from a medium-to-long-term perspective, rising energy and shipping costs provide a solid floor of support for steel prices. Furthermore, the absence of supplies from Iran may compel Middle Eastern buyers to seek alternative sources, thereby opening up structural growth opportunities for China's steel exports. Industry insiders caution that close attention must be paid to the duration of the conflict, the operational efficiency of alternative shipping routes, and the rate at which domestic steel inventories are being drawn down. Amidst the tug-of-war between geopolitical risks and the industry's current weak fundamentals, the steel trading market is entering a new cycle in 2026—one defined by high costs and high volatility.
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