FEATURE: Middle East conflict may lift iron ore freight rates to Asia

The escalating Middle East conflict is unlikely to materially disrupt seaborne iron ore trade flows to Asia in the near term, but it could lead to higher freight, insurance and fuel-related costs, which are likely to lift delivered prices and potentially reprice parts of the bulk iron ore market, five sources told Platts, part of S&P Global Energy, on March 2.

"A sustained risk premium on freight, insurance or fuel costs [due to the conflict] would directly translate into higher production costs across industrial materials and manufactured goods," Vural Burç Çakır, founder and director of Africa Mining Community, said March 2. "The first impact would likely be cost inflation rather than outright [iron ore] shortages."

Çakır added that persisting tensions could drive price volatility and freight rate spikes, prompting repricing across bulk trade flows serving the Asian industry and strategic stockpiling behavior by major importers of iron ore, particularly China and India.

The Strait of Hormuz is "not just an energy chokepoint, but a structural pillar of Asia's industrial supply chain," with even temporary disruption introducing volatility across bulk commodities linked to Asia's industrial production, Çakır said.

Platts assessed IODEX at $99.75/dry mt CFR North China on Feb. 27, up 45 cents/dmt day over day, in line with a Pilbara Blend Fines trade and two other trades in the market.

Trade flows

"At this stage, we do not anticipate a material impact on iron ore or metallurgical coal trade flows, as limited volumes transit through the Strait of Hormuz," a source at the Institute for Energy Economics and Financial Analysis said March 2.

"We don't expect much of a direct impact on metallurgical coal, other than the freight cost," Paul Bartholomew, lead ferrous metals analyst at S&P Global Energy, said March 2. "Exports of pulverized-coal injection from Russia to China and India, for example, don't pass through the Strait of Hormuz."

"Iran is a relatively small supplier of iron ore to China, and its exports were already dropping before this latest conflict," Bartholomew said.

"China's iron ore port stockpiles hit a four-year high in mid-February, so there are no supply concerns," Bartholomew added. "We think the main impact will be rising global freight rates and insurance costs."

In 2025, Iran's iron ore exports totaled 4.8 million metric tons, with 3.9 million mt, or 81.25%, destined for China, according to the latest S&P Global Commodities at Sea data.

Other destinations in 2025 included Malaysia at 470,969 mt, followed by Kuwait at 117,930 mt, India at 104,513 mt, Sri Lanka at 82,897 mt, Qatar at 52,038 mt, the UAE at 37,055 mt, Tanzania at 27,393 mt and Oman at 23,629 mt, CAS data showed.

In the year-to-date period, Iran has shipped 196,102 mt of iron ore, including 143,608 mt to China and 52,494 mt destined for India, CAS data showed March 2.

Demand sentiment

Bartholomew said iron ore demand sentiment could turn bearish if a prolonged conflict compounds global economic weakness, increasing downside pressure on steel demand and prices.

"China's ports hold enough high-grade Iranian pellets to cover near-term needs, as demand for imported pellet material remains limited," a Singapore-based iron ore trader said March 2.

"But if peace talks stall beyond a month, buyers are expected to shift that demand toward lump and other high-grade alternatives," the trader added.

Additionally, increased emphasis on environmental controls during China's upcoming Two Sessions, combined with US President Donald Trump's planned visit at the end of the month, could intensify pressure on direct feedstock demand, the trader said.

This would heighten reliance on pellets and lump, "rapidly depleting Iranian pellet inventories at Chinese ports and driving lump prices higher," although current emissions levels suggest further stringent sintering cuts are likely to remain a secondary concern, the trader added.

India, China as alternative destinations

Iron ore cargoes destined for Bahrain transit the Strait of Hormuz before proceeding northwest across the Persian Gulf. According to data from CAS, a total of 5.6 million mt of iron ore were delivered to Bahrain in 2025, with Anglo American the single largest supplier, making up 68% of the total deliveries.

"Seven Minas Rio iron ore concentrate vessels are heading to Bahrain, with the first of them currently in Oman. Depending on the first vessel, it will likely demonstrate whether vessels can enter Bahrain in the future," a North Asian trader said March 2.

"Steel mills in the region typically keep a raw material inventory that lasts for a month. If iron ore deliveries are unable to pass through the Strait of Hormuz, we could see a slowdown in iron and steel operations in the UAE or Bahrain," the trader said.

If cargoes are unable to discharge in Bahrain or Oman, China and India would emerge as the primary alternative destinations, given their ability to absorb redirected volumes, the trader added.