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Chinese mills have stopped issuing offers to Gulf buyers and freight rates have risen sharply while the duration of the disruption remains unclear, sources told Fastmarkets.
In the days following the strikes, freight rate movements and a rapid withdrawal of insurance coverage brought cargo flows through Hormuz to a near halt.
A shipowner that had agreed freight bookings for cargo to Kuwait over the weekend of February 28 raised rates by $10 per tonne — roughly 20-33% — before withdrawing by March 2, declining to carry cargo at any price, Chinese sources said.
Chinese mills have reported that routes to the Middle East are suspended pending clarity on the conflict’s progression. Some mills said they had halted shipments, citing the inability to secure vessel coverage. One trader described the situation as force majeure in commercial terms, noting that late delivery was preferable to uninsured exposure.
“The ships will wait until the Strait of Hormuz will be opened. I do not think deliveries will be made by land from Oman because it’s not feasible for the time being. I’m hearing about $10 per tonne increased freight costs, but the thing is there are no offers or buyers for China- or Asia-origin material because of the uncertainty. [The] initial problem is safety,” a Saudi Arabian trader said.
Market participants in the United Arab Emirates (UAE) reported that ships which had already departed China and were approaching UAE waters were being advised to divert and unload at ports outside the strait.
Jebel Ali port in Dubai, the largest port in the region, was reported as non-operational following a strike. Staff absences due to security concerns were also noted, with one participant describing reduced office attendance across the UAE.
Middle East and Chinese sources said that no prices were being offered or sought for new cargoes. Chinese exporters said they were unable to generate firm offers because current freight rates could not be established with any confidence. War-risk insurance, described as unavailable in current conditions, was identified as the central constraint: without cover, any cargo damaged in transit carries no protection.
Fastmarkets’ price assessments for HRC imports into the Gulf rose in the week to March 3, reflecting the combination of reduced offer availability and the additional cost burden on any cargo that does move.
Fastmarkets calculated its steel hot-rolled coil index export, fob main port China at $476.75 per tonne on Thursday March 5, up by $6.85 per tonne from $469.90 per tonne on February 26.
Fastmarkets’ weekly price assessment for steel hot-rolled coil import, cfr Jebel Ali, UAE was $495-525 per tonne on March 3, up by 10$ per tonne from $485-515 per tonne on February 24.
And Fastmarkets’ weekly price assessment for steel hot-rolled coil import, cfr Saudi Arabia (1.2 mm gauge) was $565-580 per tonne on March 3, up by $10 per tonne from $555-570 per tonne on February 24.
The HRC export index FOB China continued to rise in the week to March 5 amid support from reduced offers to the Gulf and higher freight costs.
Beyond the Gulf, sources noted that buyer caution had spread to markets whose shipping routes do not pass through the Hormuz strait, reflecting broader uncertainty about the conflict’s trajectory and its effects on oil prices and freight markets globally.
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The immediate disruption comes at a point when the Middle East has grown into an important outlet for Chinese steel, rather than a secondary market, according to Fastmarkets’ research team.
In 2025, the region accounted for 14% of China’s total finished steel exports by volume, and an even higher 14.7% by value, the latter figure reflecting a product mix weighted toward higher-specification flat products.
Hot-rolled coil highlights the region’s specific relevance: the Middle East took 19% of China’s total HRC export volume and 19% of HRC export value in 2025, with GCC countries alone accounting for around 17% of HRC exports.
Saudi Arabia and the UAE are consistently among China’s top individual steel export destinations. Saudi Arabia alone represented roughly 33.2% of Chinese finished steel deliveries to the Middle East and the UAE approximately 32.6%.
Paolo Frediani, senior steel analyst at Fastmarkets, said: “About 16% of China’s flat steel exports were shipped to the Middle East last year — unchanged from 2024 — but the region’s share has risen steadily in recent years, up from just 9% in 2021. This growth reflects a combination of comparatively strong demand in the Gulf and the tightening web of trade restrictions facing Chinese steel in other parts of the world.”
“With domestic demand remaining weak, exports play an important role for Chinese HRC producers, so any prolonged conflict would pose clear risks as shipping routes are disrupted and end-user demand in the Middle East is negatively affected. That said, profit margins for Chinese steelmakers are already extremely thin, which in turn limits the potential downside,” Frediani added.
The region’s rising share of Chinese steel exports over recent years is partly a result of trade diversion, according to Fastmarkets’ research team. Anti-dumping measures in Southeast Asia, the EU’s Carbon Border Adjustment Mechanism (CBAM) and US tariffs have progressively reduced China’s access to other major markets, prompting the country to direct volumes to Gulf destinations with comparatively open import policies and active construction pipelines.
Sources said shipments to the Gulf would remain on hold while insurance coverage for transit through Hormuz remains unavailable and security conditions at destination ports remain unresolved.
No firm timeline for resumption was offered by any source.
Chinese sources indicated that if disruption extended significantly, trade flows could adjust through price and routing: Turkish material could be sourced overland into parts of the Gulf and longer alternative routes — including via Pakistan and Central Asian rail — were cited as theoretical options, though at significant higher costs.
Most sources treated these as contingency scenarios rather than near-term solutions.
“The demand is there, but the imports will not happen for some more time. No one can make predictions,” a Chinese trader told Fastmarkets.
For now, the market has moved into a period of observation. Chinese exporters, Middle East buyers and shipping operators are monitoring the pace and direction of the conflict before committing to new transactions.
Whether that pause remains short-lived or extends into a prolonged realignment of trade flows will depend on developments that, as of March 5, remain highly uncertain.
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