Suez Canal Lockdown Will Increase Price Pressure on Steel and Metals

The waterway is used to transport steel and steelmaking raw materials including iron ore, pellets and hot rolled products between the CIS and Asia, including China; aluminum semi-finished products from the Middle East to Europe and for copper supplies from the West to China.

The blocking of the Suez Canal by the container ship Ever will have an immediate impact on steel and metals shipments around the world, market sources said on March 25. This could increase current upward price pressures, especially on steel and copper, they said.

“The impact on commodities extends beyond oil and gas,” said Derek Langston, head of research at SSY's shipbroker. “A multitude of bulk cargoes use the Suez Canal to access key markets in Asia, including grain from the Black Sea and Europe, coal and iron ore from the Black Sea, and fertilizers from the Baltic Sea. Even the supply of coal and petroleum coke from the US to India is using the channel.

“Indeed, the Black Sea shipping schedule has already been affected by the incident due to delays in ships arriving at the port to load cargo, with the potential to further increase the ship shortage,” Langston said.

Oil and gold prices were higher in early March 25 after the impact of the March 23 blockade became apparent and then declined later that day. More than 150 ships were reportedly queuing to cross the blockage.