INTERVIEW: Hormuz closure reshapes GCC steel trade as freight, delivery risks surge: SteelGiant CEO

The blockade of the Strait of Hormuz has forced a costly reworking of steel trade flows into the Gulf Cooperation Council nations, sharply widening the gap between FOB China prices and delivered costs in the region, Thaiseer D. Jaffar, CEO of SteelGiant Commodities, said in an interview with Platts May 25.

Jaffar said the impact is best measured through hot-rolled coil because the GCC remains heavily dependent on imports and HRC is the region's key ferrous import from China.

For the last two decades, SteelGiant has been actively involved in exporting steel products and equipment for the steel industry from China to the GCC and the rest of the world.

In 2025, about 14% of China's total steel exports went to the Middle East, while the GCC accounted for 17% of China's total HRC exports, Jaffar said.

The UAE alone imported about 200,000 metric tons/month of HRC in 2025, while Saudi Arabia's HRC imports were 30%-40% higher despite stricter import rules intended to protect local producers, Jaffar said.

According to Jaffar, ports inside Hormuz, including Jebel Ali, Abu Dhabi, Hamriyah, Dammam, Hamad, Shuwaikh, Manama and Umm Qasr, became inaccessible to cargo shipping after the conflict began on Feb. 28.

That forced breakbulk steel cargoes to reroute to Sohar, Salalah, Fujairah, Jeddah and Jizan, while containerized products such as coated flats, pipes and steel wires were diverted to Khor Fakkan.

Before the conflict, Tier-1 Chinese HRC was booked at $460-$465/mt FOB China, Jaffar said.

By May 20, 3-mm base S235JR HRC from Tier-1 Chinese mills had risen to $510/mt FOB, up about $50/mt from pre-conflict levels, he added.

Freight moved even more sharply, with full-vessel HRC freight to Fujairah and Sohar climbing to $70-$90/mt during the blockade from $35-$40/mt before the conflict, while billet freight doubled to $40-$50/mt from $20-$25/mt, Jaffar said.

Freight to Jeddah rose more modestly, to $48/mt from $40/mt, but the route offers limited benefit to buyers in the UAE, Oman, Qatar, Kuwait, Iraq and Bahrain because of the distance, limited trucking availability and the absence of port-bonded warehousing in Saudi Arabia, Jaffar said.

Landing costs have also risen sharply, with inland delivery in the UAE increasing from the usual $8-$11/mt to $27/mt from Fujairah and $68/mt from Sohar, while transport from Jeddah costs $120-$150/mt and from Jizan $150-$170/mt, Jaffar added.

Importers are also facing war and port surcharges of roughly $10-$35/mt, adding further pressure to replacement costs.

Higher replacement costs initially pushed up domestic prices, but weak demand has limited how much of that increase could be passed through.

During the first week of the conflict, major UAE HRC stockists raised selling prices to $750/mt from $520/mt, but those levels did not hold and later retreated to $670-$680/mt, Jaffar said.

Other products also increased, with UAE rebar up $50-$55/mt and ERW pipes up $200-$230/mt, putting downstream fabricators under additional pressure, he added.

Current UAE demand for steel products excluding billet and rebar stands at about 70% of pre-conflict levels, with Saudi demand at about 80% of pre-conflict levels, Jaffar said.

Congestion strains fallback ports

The rerouting has shifted the region's main problem from access to congestion, Jaffar said.

In the first half of March, Chinese ships bound for ports inside Hormuz were stalled outside the strait near the Gulf of Oman, and as the conflict escalated in the second half of March, some discharged cargo to India and Pakistan to avoid further costs, he said.

A couple of Japanese mills also discharged HRC cargoes in Mumbai, and those shipments were still at Indian ports as of May 25, Jaffar said.

As diverted cargoes concentrated in Fujairah and Sohar, congestion worsened, with breakbulk cargoes of steel and other non-perishable goods taking at least one month to berth in Fujairah, he said.

By contrast, full-ship cargoes for a single consignee have, in some cases, berthed within three to four days because port procedures are simpler than for multi-consignee ships.

Jaffar said Sohar and Fujairah had become the region's key supply-chain lifeline during the disruption.

Export activity and regional responses

Since Feb. 28, only a few Chinese HRC deals have been heard into Jeddah, Fujairah, Aqaba and Sohar, totaling about 140,000 mt, Jaffar added.

He said no GCC HRC deals were heard from Japan, India or South Korea during that period, and no major deals were heard for coated flat steel or steel pipes.

Billet trade has been more resilient, with bookings of as much as 250,000 mt from China into the UAE, Saudi Arabia and Jordan at $525-$536/mt CFR during April.

Chinese exporters and Chinese-owned ship operators were among the fastest to react, rerouting cargoes, switching bills of lading and, in some cases, absorbing part or all of the additional port charges.

According to Jaffar, the only two ships known to have passed through Hormuz and reached inner ports were Chinese-owned.

Japanese exporters halted cargoes immediately after the conflict began and rerouted shipments already at sea to India, while Indian mills have largely stopped offering CFR cargoes into GCC ports in order to reduce risk exposure.

Outlook

Jaffar said Chinese steel prices rose from the start of the conflict until mid-May, supported by an appreciating yuan, production cuts, stronger export demand, higher raw material and freight costs, and improved domestic funding for infrastructure and real estate projects.

Prices then softened by about $15/mt between May 12 and May 23, before a coal mine accident in China lifted futures again on May 25, with HRC up 1.2%, rebar up 1.4%, ferroalloys up 2.1% and coal/coke up 8% on Dalian.

Platts, part of S&P Global Energy, assessed 3-mm-thick SS400 HRC at $502/mt FOB China May 25, up $3/mt from May 22. The same grade was assessed at $572/mt CFR Southeast Asia, up $3/mt over the same period. Export offers from private Chinese mills rose by $5-$6/mt day over day to $507/mt FOB China and above May 25.

Even so, GCC steel prices are unlikely to sustain further increases after the initial March rally failed to hold, he said.

A broader recovery in downstream demand will depend on the restoration of more stable supply chains, particularly for billet.

Over the next 12 months, sentiment remains mixed, with about 30% of market participants [in his network] pessimistic because of the conflict's prolonged impact on regional supply chains, while close to 70% expect demand to exceed pre-conflict levels once stability returns and delayed projects resume, Jaffar said.