Escalating geopolitical tensions in the Middle East, following the U.S.-Israel conflict with Iran and its spillover across the GCC, are disrupting regional supply chains, particularly through the Strait of Hormuz, a key global trade corridor.
Shipping through the strait remains constrained despite a temporary ceasefire, with many operators rerouting or avoiding the region. This has led to delays, higher freight costs, and reduced visibility across bulk and container flows.
Against this backdrop, Arabian Gulf Steel Industries (AGSI) is maintaining stable production, though operations are increasingly shaped by logistics constraints, according to CEO Asam Hussain.
“Recent developments have not changed the immediate demand environment, which remains relatively stable,” Hussain said, adding that the main impact is on supply chain functionality.
The company’s steel production remains active, with output aligned to raw material availability and delivery schedules. Disruptions to traditional shipping routes have reduced predictability in inbound flows of key inputs, including scrap, while port access constraints, vessel availability, and inland transport bottlenecks are extending lead times.
To maintain continuity, AGSI is increasingly using alternative routes, including landbridge solutions, although these add cost and complexity.
“Supply has not stopped, but it is no longer moving as predictably as before,” Hussain said.
Logistics has become the primary constraint, outweighing demand-side factors. Freight and handling costs have risen sharply, directly pressuring production economics and margins.
Construction demand remains intact, but buyers are adopting a more cautious approach, with shorter booking cycles and tighter volume management reflecting uncertainty around delivery timelines and costs, Hussain said.
Billet production remains largely integrated, supporting in-house rolling operations following the commissioning of new capacity, he added.
AGSI recently commissioned its HRM 3 rolling mill at ICAD II in Abu Dhabi after completing cold and hot trials. The mill, hot-charged from the company’s meltshop, has an annual capacity of 600,000 tons of net-zero steel rebar.
At full capacity, HRM 3 will add 600,000 tons per year of rolling capacity. AGSI also operates HRM 2, a 240,000 tons-per-year light and medium sections mill, while HRM 1 is being upgraded, with commissioning expected in the second quarter of 2026. Capacity at HRM 1 will increase to 800,000 tons per year following completion.
Operations continue as normal, supported by clear internal communication and strengthened coordination rather than reactive changes, Hussain said. The priority remains ensuring operational continuity while maintaining a safe and stable working environment.
AGSI is a privately owned steel producer and the largest scrap recycler in the UAE, with current annual production capacity of 720,000 tons of billet, 1 mln tons of rebar, and 240,000 tons of light and medium sections. The company has achieved net-zero emissions at its Abu Dhabi plant, becoming the first net-zero steel plant in the MENA region.
