MethodologyContact usSupportLogin
Key takeaways:
Despite reports of a tentative ceasefire between Iran and the United States via mediation from Pakistan on Wednesday April 7, which would include the reopening of the Strait of Hormuz, sources said significant uncertainty remained and that it would take a long time for steel supply chains to recover.
Deliveries of key input materials, such as iron ore pellets and ferroalloys, into the Gulf have been disrupted by the blockage of the Strait of Hormuz over the last five weeks, forcing mills to cut back on steel production, sources told Fastmarkets.
Meanwhile, demand for construction steel from infrastructure projects in Saudi Arabia and the United Arab Emirates (UAE) remained moderate despite the regional crisis.
A lack of seaborne steel raw material supply has driven some GCC steel mills to consider purchasing larger volumes of ferrous scrap and steel billet over recent weeks, pending logistical viability, sources said.
The imbalance between steel supply and demand has pushed rebar prices sharply higher in Saudi Arabia and the United Arab Emirates (UAE), with several market sources expecting further increases.
Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, delivered Saudi Arabia was 2,300-2,460 ($612-655) riyals per tonne on April 7, up by 70-100 riyals per tonne from 2,230-2,360 riyals per tonne on March 30, and up by 160-250 riyals per tonne on February 23, just before the beginning of the conflict.
Regional mills have also been concerned about the availability of ferro-alloys, with containerized imports under huge pressure in the Gulf and freight costs spiking, two Gulf steel sources said.
Before the shipping crisis, 20-foot containers from India to the UAE were priced at $300, but had risen to $3,500 as of last week, a Gulf mill source said, while rates from China increased to around $6,500-7,000 per container.
Falling Gulf steel production marks a sharp reversal after a year of growth for many regional steelmakers in 2025. GCC crude steel production hit 21.64 million tonnes in 2025, up by 9.5% year on year, according to the Arab Iron and Steel Union (AISU).
Saudi Arabia produced 10.78 million tonnes of steel alone, an increase of 12.3% year on year.
Inform your base metals strategy with metals price forecasts and analysis for the global base metals industry. Get a sample of our base metals price forecast today.
Market participants said that normal shipping operations may not resume immediately as reports of sporadic strikes in the region continue.
“It is too early to comment on the strait. Freight is still very expensive, and insurance companies do not have trust yet,” a second Gulf steelmaker told Fastmarkets on Wednesday.
“Two weeks are just enough to clear the vessels which are stuck. I do not think any new journeys will be initiated,” a UAE trader source said.
Under the two-week ceasefire plan, Iran could impose transit-related charges on vessels moving through the Strait of Hormuz, according to news reports.
Market participants estimated safe passage through the Strait could cost around $10 per tonne. This would mean that a vessel carrying 50,000 tonnes of steel could pay approximately $500,000 as a toll to Iranian authorities. Additionally, the tariff for oil shipments would be around $1 per barrel, while empty tankers would be allowed to pass freely, according to sources.
Maersk, the world’s second-largest shipping line, said that a ceasefire “may create transit opportunities, but does not yet provide full maritime certainty”, while rival Hapag Lloyd said it will “continue to avoid transiting the Strait of Hormuz for the time being.”
A steel buyer said: “There is already a fuel surcharge due to increasing marine fuel prices and now an additional toll to pass cargo through Hormuz. This is impractical for trade.”
Meanwhile, the Mediterranean Shipping Company (MSC) extended its Emergency Fuel Surcharge (EFS) until April 30 for all cargo moving from the Mediterranean and the Black Sea to the Indian subcontinent, the Red Sea and East Africa.
Before the conflict started, several hundred thousand tonnes of iron ore pellet arrived in Gulf ports every month. These materials were used as inputs to large direct-reduced iron (DRI) modules, providing high-quality steelmaking raw materials to mills in GCC states.
For example, in March 2025 alone, Sweden exported 341,778 tonnes of iron ore materials under HS code 2601 to Saudi Arabia and 164,676 tonnes to Qatar, according to Eurostat data.
In the same month, Bahrain exported 250,630 tonnes of materials under the same code to Saudi Arabia, 268,255 tonnes to Qatar and 100,639 tonnes to the UAE, according to Bahrain customs data.
Security and logistical challenges forced Foulath Holding — the parent company of major iron ore pellet producer Bahrain Steel and compatriot steelmaker SULB — to declare force majeure on its operations on March 28.
The company announced a resumption of operations a day later. But sources told Fastmarkets that significant portions of several Gulf steelmaker operations may still remain affected.
The resulting supply shortfall could continue to impact Gulf markets in the coming weeks, sources said.
“We are slowing down production at the moment, but we have a good quantity of DRI until May or June,” a third Gulf steelmaker source said late last week. “We are instead making higher purchases of scrap”.
Still, the difficulty in obtaining iron ore pellets for DRI plants and falling steel output meant that “rebar supply will be tighter in May, and prices will go up further”, the source said.
Fastmarkets’ steel scrap HMS 1&2 index, domestic composite, delivered Saudi Arabia was 1,479.05 riyals per tonne on April 7 — its highest level since pricing began in August 2025 — up from 1,439.81 riyals the week prior.
Saudi Arabia has limited scrap availability relative to domestic requirements.
The country has four operational electric-arc furnace (EAF)-based steelmakers, three of which use around 80-85% direct reduced iron (DRI), with the remainder made up of ferrous scrap as of January 2026. Two of these three are located in the Eastern Province, along the Persian Gulf beyond the Strait of Hormuz.
The fourth mill, located in the western part of the country, typically uses 15-20% direct reduced iron (DRI), with most of its raw material consisting of ferrous scrap, sources told Fastmarkets.
“If [iron ore] ships cannot get to the Gulf and if mills turn to scrap to fill the gap, they will suck up the whole supply of scrap in the country,” a fourth Gulf steel source told Fastmarkets in the previous week.
Transporting DRI from operational ports in the country’s west, such as Yanbu, and trucking it across the country is possible but challenging, the fourth Gulf steel source added.
Last year, before road freight demand increased, the journey between the western and eastern coasts of Saudi Arabia took around three days, the source said, with large volumes requiring multiple trucks, each typically carrying around 30 tonnes.
If production costs remain high at Gulf mills and supply remains low, Saudi Arabian steel prices could increase by a further 200 riyals per tonne in April, the source added.
Whether the ceasefire holds, and how quickly GCC steel markets can recalibrate after weeks of disruption, is among the key questions participants will continue to watch closely.(The 22nd, 29th and 30th paragraphs of this report have been reedited for clarity after its initial publication.)
Understand current steel price trends and access hundreds of historical steel prices in one place. Find out more about Fastmarkets’ steel prices here.