The current escalation in the Gulf region has limited direct effects but significant indirect repercussions on China's steel exports. China's annual steel exports to Iran amount to merely 267,000 tonnes, accounting for 0.22% of total exports. However, the seven Persian Gulf nations collectively represent 11.72% of exports (projected combined exports of 12.35 million tonnes by 2025). The suspension of shipping through the Strait of Hormuz has triggered soaring freight rates and the absence of war risk insurance. This is expected to reduce monthly exports by approximately 1.1624 million tonnes in the short term. Should the disruption persist beyond three months, China risks losing market share in the Middle East. Concurrently, a notable increase in secondary market supply globally will exert downward pressure on prices in the near term.
Confronted with this sudden crisis, major container shipping lines swiftly adjusted freight rates: on one hand, imposing comprehensive surcharges to pass on risks; on the other, suspending routes or adjusting operations. CMA announced surcharges of $1,500–3,000, while MSC added $1,000 per container and planned to raise rates to $2,980 per container within a week. HPL suspended all Middle East services, PIL halted new bookings, while COSCO adopted a cautious approach by restricting bookings and reducing vessel speeds to monitor developments, with some cargoes slated for discharge in Oman or India. (Under maritime law, shipowners may discharge cargo at any port deemed safe, with all costs borne by charterers.)
In 2025, exports of steel to major Middle Eastern countries accounted for 15.6% of China's total steel exports, making it the second-largest regional market. Steel exports to Iran constitute only a minor portion of China's Middle East exports. Data indicates China's total steel exports to Iran in 2025 will be 267,000 tonnes, representing a 34% year-on-year decline. Iran accounts for merely 0.22% of China's total steel exports. In absolute terms, China's direct steel exports to Iran are negligible, exerting minimal direct impact on Iran.
The greater impact lies in the indirect effects on overall Middle Eastern supply and demand via shipping routes. The Strait of Hormuz occupies a critical geographical position, serving not only as a vital transit point for the Persian Gulf but also as a key hub for China's steel exports to Saudi Arabia, the UAE, Iraq, Kuwait, and other nations. Should the strait face restrictions, China's direct steel export routes would be directly disrupted, potentially leading to a rise in export freight costs and a weakening of export competitiveness.
Analysing product-specific data reveals that plate steel constitutes the primary steel category exported to Middle Eastern nations. The United Arab Emirates, Saudi Arabia, and Turkey are particularly affected, China's plate exports to these three nations account for approximately 4% to 5% of total plate exports. Exports to the major Persian Gulf states (the aforementioned seven countries combined) represent 12.64% of total plate exports, while exports to Middle Eastern nations as a whole constitute 21.82% of total plate exports. The next most affected product categories are angles and bars, while pipes and wire rod face relatively minor impacts.
Iran occupies the northeastern shore of the Persian Gulf, while the southwestern shore is sequentially occupied by Iraq, Kuwait, Saudi Arabia, Bahrain, Qatar, the United Arab Emirates, and Oman. Countries directly impacted are those within the Persian Gulf that must transit the Strait of Hormuz for maritime trade with China, namely Saudi Arabia, the United Arab Emirates, Iraq, Kuwait, Qatar, Iran, and Bahrain. China's steel exports to these seven nations accounted for 11.72% of total steel exports in 2025. Among them, the UAE, Saudi Arabia, and Iraq faced the most significant indirect impacts, with steel exports to these three countries representing 10.38% of the total, amounting to 12.35 million tonnes collectively in 2025.
Exports to Red Sea coastal nations, North Africa, and East Africa traditionally require transhipment via the Strait of Hormuz. Disruption to the strait may necessitate rerouting around the Cape of Good Hope. Exports to Europe could face impacts from overall congestion on Asia-Europe shipping lanes and general freight rate increases. The primary effects on exports to these regions are cost escalation and order delays, rather than complete disruption. Southeast Asia (Vietnam, Thailand, Indonesia, etc.), Northeast Asia, South Asia, the Americas, and Australia remain largely unaffected or minimally impacted.
Export orders for mid-to-late March secured in February remain largely unaffected for now, but new orders for March and shipments beyond April face imminent crisis. With freight rates surging across the board, Middle Eastern buyers have halted enquiries, while Chinese exporters, unable to ascertain current rates, have suspended quotations, plunging the market into stagnation. The core risk lies in the unavailability of war risk insurance, leaving cargo virtually unprotected against potential damage. More critically, under maritime law, shipowners retain the right to discharge cargo at any port deemed safe, with all resulting additional costs borne by charterers. With multiple vessels currently anchored in the Persian Gulf, charterers face uncontrollable transhipment costs and delivery delays should shipowners invoke this clause. With Persian Gulf shipping routes effectively paralysed, China's steel exports now confront multiple challenges: transport disruptions, soaring costs, and unmanageable risks.
Should the Strait of Hormuz remain blocked for one month: New orders for March will freeze entirely, while shipments scheduled for April and beyond will be
Iran occupies the northeastern shore of the Persian Gulf, while the southwestern shore is sequentially occupied by Iraq, Kuwait, Saudi Arabia, Bahrain, Qatar, the United Arab Emirates, and Oman. Countries directly impacted are those within the Persian Gulf that must transit the Strait of Hormuz for maritime trade with China, namely Saudi Arabia, the United Arab Emirates, Iraq, Kuwait, Qatar, Iran, and Bahrain. China's steel exports to these seven nations accounted for 11.72% of total steel exports in 2025. Among them, the United Arab Emirates, Saudi Arabia, and Iraq faced the most significant indirect impacts, with steel exports to these three countries representing 10.38% of the total. Combined exports to these three nations reached 12.35 million tonnes in 2025.
The northeastern shore of the Persian Gulf is Iran, while the southwestern shore is successively Iraq, Kuwait, Saudi Arabia, Bahrain, Qatar, the United Arab Emirates, and Oman. Countries directly impacted are those within the Persian Gulf that must transit the Strait of Hormuz for maritime trade with China, namely Saudi Arabia, the United Arab Emirates, Iraq, Kuwait, Qatar, Iran, and Bahrain. China's steel exports to these seven countries accounted for 11.72% of total steel exports in 2025. Among them, the UAE, Saudi Arabia, and Iraq face the most significant indirect impacts, with steel exports to these three countries representing 10.38% of total exports. Combined exports to these three nations reached 12.35 million tons in 2025.
Traditionally, shipments to Red Sea coastal nations and North/East African countries often transited through the Strait of Hormuz. Disruptions there may force rerouting via the Cape of Good Hope. Exports to Europe could face broader congestion on Asia-Europe routes and rising freight rates. The primary impacts for these destinations are cost increases and order delays, not complete shipping halts. Southeast Asia (Vietnam, Thailand, Indonesia, etc.), Northeast Asia, South Asia, the Americas, and Australia remain largely unaffected or minimally impacted.
Export orders for mid-to-late March secured in February have not yet faced significant disruption. However, new orders for March and exports scheduled for April and beyond will confront imminent crises. With freight rates surging across the board, Middle Eastern buyers have halted inquiries, while Chinese exporters are forced to suspend quotations due to uncertain shipping costs, causing market stagnation. The core risk lies in the unavailability of war risk insurance, leaving cargo virtually unprotected against damage. More critically, under maritime law, shipowners retain the right to discharge cargo at any port deemed safe, with all resulting additional costs borne by the charterer. Multiple vessels are currently anchored in the Persian Gulf. Should shipowners invoke this clause, charterers will face uncontrollable transshipment costs and delivery delays. With the Persian Gulf route effectively paralyzed, China's steel exports now confront multiple challenges: transportation disruptions, soaring costs, and unmanageable risks.
Should the Strait of Hormuz remain blocked for one month: New orders in March will freeze entirely, while steel export contracts scheduled for shipment after April face widespread delays or breaches. If stranded vessels invoke the safe port discharge clause, vast quantities of steel will be forced to unload mid-transit in locations like Oman and India, with subsequent transshipment costs and delivery cycles spiraling out of control. Traders will be compelled to suspend Middle East quotations, causing export volumes to plummet abruptly.
Under these circumstances, short-term shipment slowdowns combined with rising freight rates would passively elevate FOB export quotations. This is projected to impact China's steel exports by approximately 11.72%, with a monthly average impact of about 1.1624 million tons. This includes approximately 770,000 tons of plate products, 280,000 tons of angle products, bar products by approximately 40,000 tons, and pipe and wire rod by approximately 50,000 tons and 20,000 tons respectively.
If the disruption persists for two months: The crisis enters a mid-term stalemate phase. Charterers begin facing sustained demurrage, storage fees, and secondary transshipment costs, with some small and medium-sized traders experiencing cash flow pressures. Shipping lines, facing prolonged route disruptions, may implement temporary route withdrawals or consolidation for Persian Gulf services, further contracting container supply. Middle Eastern buyers may shift from waiting to seeking alternative sources (e.g., Turkey, India), potentially showing signs of loosening China's steel market share.
If the stalemate persists for three months or longer: Supply chains will undergo structural restructuring. Some shipping lines may permanently adjust routes, degrading Persian Gulf port functionality. Steel would then require detours through third countries (Oman, Saudi Arabia via land) to enter Middle Eastern markets, with logistics costs remaining persistently high—passively driving up local steel prices. More profoundly, Middle Eastern buyers may accelerate their search for alternative suppliers (e.g., Turkey, India, Russia), posing a risk of permanent market share loss for Chinese steel. The long-term absence of war risk insurance will also force trade models to shift toward “risk-bearing” or “prepayment + disclaimer clauses,” further raising transaction barriers.
The recent military conflict between Israel and Iran has triggered a sharp escalation in the Gulf region. Although the Strait of Hormuz has not been formally blocked, shipping has effectively ground to a halt. The impact on Chinese steel exports is primarily indirect, yet its depth far exceeds that of direct trade with Iran. Countries whose shipping routes must pass through the Strait of Hormuz have become the core areas affected.
The core issues stemming from the conflict are concentrated in the logistics sector: Shipping companies have imposed additional fees of $1,000–3,000 per container, with some suspending Middle East routes or restricting bookings. Combined with maritime law provisions allowing shipowners to divert ports, this has caused export costs to soar and fulfillment risks to surge, effectively halting China's steel exports to Persian Gulf nations. By product type, plate steel has been most severely impacted, accounting for over 60% of exports to the seven Persian Gulf nations. Angle steel and bars follow next, while pipes and wire rod have seen relatively limited disruption.
Escalating geopolitical tensions have worsened the external environment for China's steel exports. Close monitoring of developments in Hormuz Strait navigation, international oil price fluctuations, and shipping freight rates will be essential moving forward.
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