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GCC HRC availability is tightening as shipping disruptions and elevated freight costs make Chinese material increasingly difficult to secure, while Indian mills are gaining interest among UAE buyers.
MESTEEL’s last week assessment puts Chinese 3mm HRC at USD 565-575 per ton CFR UAE for Tier 1 mills, with upward pressure on the assessment this week as leading Chinese mills offer at least USD 500 per ton FOB and freight costs continue to rise.
Chinese HRC offers to the GCC have become scarce. A Chinese trader told MESTEEL that suppliers are increasingly reluctant to offer for the region because of the risks and uncertainty surrounding shipping.
Several UAE buyers, including pipe producers and rerollers, have booked Indian HRC on an FOB basis, according to market sources. Indian HRC offers are currently heard at around USD 520-530 per ton FOB. A trader noted that with several UAE buyers sourcing from the same Indian mill, there could be scope to combine cargoes into a larger shipment, although it remains unclear how this will be arranged given continued vessel availability, port congestion and regional security risks.
Jeddah, which initially emerged as an alternative gateway for cargo avoiding the Strait of Hormuz, is now facing both congestion and higher security-related shipping costs. Increased cargo volumes have put pressure on the port and inland transport network, while Houthi attacks in the Red Sea have increased the risk premium and made fewer vessel owners willing to take the route.
A logistics manager at a GCC steel trading company told MESTEEL that no vessels had recently been proposed for China-Jeddah shipments, while vessels proposed for Jebel Ali and Dammam were carrying waiting clauses linked to the closure of the Strait of Hormuz. The source said waiting charges were around USD 0.70 per ton per day, while congestion at ports outside the strait, including Sohar, Fujairah and Jeddah, was resulting in waiting times of at least three to four weeks.
Freight for shipments from northern China to Saudi Arabia has also approached USD 100 per ton on a FILO basis, according to market information. Vessel owners are citing elevated security and operational risks around Saudi ports as an additional cost factor.
UAE buyers are therefore showing a willingness to secure alternative supply despite the additional logistics burden. Some buyers have also limited procurement from Saudi benchmark mills and are avoiding Chinese-origin material despite a significant price gap, preferring to reduce exposure to uncertain shipping and inland transportation.
Demand has not disappeared despite the seasonal summer slowdown. Market participants told MESTEEL that the main constraint is increasingly the availability of workable material rather than a lack of buying interest. UAE buyers that already received material at Jeddah port after diverting cargoes because of disruption at UAE ports are also facing sharply higher inland transportation costs, with some considering selling cargo within Saudi Arabia rather than moving it further into the GCC.
Until vessel availability, port congestion and security-related costs improve, the gap between nominal FOB prices and workable CFR prices is likely to remain unusually wide. This is keeping buyers active where material can be secured, even as the broader summer market remains cautious, a trader told MESTEEL.
