The US-Israeli military strikes on Iran that began on February 28 and the subsequent Iranian response have naturally created a tense situation in the Persian Gulf, affecting operations in many industrial segments in the regions. The effects have already been seen in the oil and gas sector, with disruptions to maritime activities already reported in and around the region. On the steel and raw material supply side, there could be a potential impact from supply disruptions from Iran itself, mainly to Asia, while the situation in the Strait of Hormuz is likely to lead to delays in supplies heading to Gulf ports. If the war continues, the situation could lead to higher steel prices in the region, especially for locally prepared materials, as buyers may have to replenish inventories to make up for the volumes they previously placed import orders for which end up being delayed. If the situation is not resolved soon, some cargo may be diverted to alternative destinations, which will also affect steel market prices, at least temporarily.
The Strait of Hormuz is currently blocked, although there has been no official closure. However, the number of ships choosing this route has decreased significantly. “Transport is virtually at a standstill today, but it looks like a short-term shutdown,” said one international trader. Currently, ships are stuck on both sides of the line as transport is risky and several ships have already been attacked.
Asia's largest steel exporters surveyed by SteelOrbis say they see major risks to the steel market due to rising tensions between Iran, Israel and the US in the region, in terms of rising freight rates, less cargo available on the Asia-Middle East route and possible transport delays. “Due to increased regional risks, delivery costs have increased by 15-20 percent... Product prices in China remain stable. The current price adjustment is strictly related to transportation costs,” said a representative of a large Chinese exporter. Another major trader commented to SteelOrbis: “We are already seeing a rise in freight, but most shipowners will need a day or two to settle prices given the current risks. Other impacts are still taking longer to be seen."
Market sources said freight rates on the China-Turkey route today for a 40,000 ton vessel start at $40/t, up from the previous $35/t.
Another major issue arising from the attacks on Iran is the expected delay in shipments
