Escalating regional tensions in the Middle East have sharply curtailed vessel movements through the Strait of Hormuz, disrupting one of the world’s most strategic maritime corridors and directly impacting steel trade flows into the Gulf.
Although no formal closure has been declared, shipping activity through the strait has dropped significantly. Several vessels have reportedly been hit, insurers have tightened war-risk coverage, and shipowners are avoiding the corridor due to mounting security concerns. Freight availability has contracted rapidly, pushing rates higher within days.
Major carriers have suspended new bookings or halted operations on Gulf routes. Hapag-Lloyd has introduced a war risk surcharge for cargo moving to and from the Upper Gulf, Arabian Gulf and Persian Gulf, adding immediate cost pressure to regional shipments. Market sources also report that vessels are being rerouted via longer corridors such as the Cape of Good Hope, significantly extending transit times and increasing costs.
For the steel sector, the impact is already visible. Chinese exporters, a key supplier to Middle Eastern markets, have suspended new offers as vessels are no longer being assigned to routes near the Persian Gulf, according to some Chinese steel traders.
Within the GCC, while steel import activity has slowed considerably, domestic trading continues, though sentiment has shifted. Steel stockists have raised prices, tightened payment terms, and limited exposure until the situation improves.
Market sources said that if disruptions persist, delayed cargoes could trigger short-term restocking demand, supporting regional steel prices, especially for material already available on the ground.
The situation remains highly dynamic. Freight surcharges, rerouting, port congestion and extended transit times are increasing cost volatility across the steel supply chain, market sources added.
