The Impact of The Iran Situation on The Middle East Steel Market

The impact of the Iran situation on the Middle East steel market

core viewpoint

Impact of damaged buildings: Iran's response to the attack mainly targeted US military bases in the Middle East, with limited damage to some buildings. For example, the Dubai Sailing Hotel suffered damage and caught fire on one side, the world's tallest building, the Burj Khalifa, was evacuated urgently without reporting structural damage, and some berths in Jebel Ali Port caught fire. Dubai and Al Maktoum International Airport have suspended operations.

The impact of steel import and export: The suspension of shipping in the Strait of Hormuz has blocked domestic steel exports to Iran, and alternative routes are affected by long land distances and air strikes, making it difficult to maintain operations; The suspension of operation at Jebel Ali Port has caused importers of bulk steel to transfer their goods to Fujairah Port and Sharjah Port, but the transfer has also resulted in congestion at normally operating ports, which is difficult to alleviate in the short term.

Market price impact: The shortage of steel billets and rebar supply in the UAE has persisted for a long time, and the market often experiences shortages of specifications. The conflict and disturbance of overseas geography will further exacerbate the mismatch between supply and demand, and prices may continue to rise.

On February 28, 2026, a conflict broke out between the United States, Israel, and Iran, and with the severe escalation of the situation in the Middle East, it has spread to the Gulf region. In response to the impact of this incident, our website has conducted a review and research, and the relevant content is as follows:

Situation in Iran: Currently, shipping in the Strait of Hormuz is suspended, and transportation transactions in this channel have almost come to a halt.

Impact on Domestic Steel Plant Production in Iran: Iran is the tenth largest crude steel producer in the world, with the steel industry as its pillar industry and huge local production capacity. The total domestic steel production capacity in Iran is about 55 million tons per year. In January 2026, Iran's crude steel production was 2.6 million tons, a year-on-year increase of 15.1%. Iran has abundant iron ore and natural gas resources, which provide sufficient raw material guarantees for steel production. However, due to the lack of coal and coke resources, blast furnaces, which are long process steelmaking, cannot be developed on a large scale. Iran mostly uses direct reduced iron and electric arc furnaces for production, and its domestic scrap steel resources are insufficient to meet the demand for electric furnace steelmaking, mainly relying on imports. The suspension of shipping in the Strait of Hormuz will have an impact on Iran's imports, causing a decline in local steel production.

Impact on China's exports of Iranian steel: According to customs data, China will export 267000 tons of Iranian steel in 2025, accounting for only 0.22% of the total domestic exports. At present, steel is mainly transported to Iran by sea, starting from ports such as Qingdao, Tianjin, Shanghai, and Lianyungang, crossing the South China Sea through the Strait of Malacca to reach the Indian Ocean, and then entering Iran from Abbas Port through the Strait of Hormuz. The alternative route departs from domestic ports, bypasses the Strait of Hormuz, and enters Iran through the Gulf of Oman via the Chabahar Port. However, the throughput capacity and infrastructure of Chabahar Port are far less mature than those of Abbas Port, making it difficult to undertake large-scale steel imports in a short period of time. Moreover, transporting steel from Chabahar Port to Iran's core industrial areas such as Tehran and Isfahan requires a long land distance. Due to the possibility of damage to some railways and roads in air strikes, the alternative route will be difficult to operate. Overall, with the closure of the Strait of Hormuz in the short term, domestic steel exports will be severely hindered. Although there are alternative routes, their operation will be difficult to maintain due to the long land distance and air raids. However, due to the small total export volume, the overall impact is limited.

UAE situation: On the evening of February 28th, explosions were heard successively in Abu Dhabi, Dubai and other places. The world's only seven star hotel, the Sailor Hotel, located on Jumeirah Palm Island in Dubai, was damaged, and a fire broke out on the scene. The world's tallest building, the Burj Khalifa, was evacuated urgently. Dubai International Airport and Al Maktoum International Airport have suspended operations, causing air hubs to come to a standstill.

Regarding the impact of this incident on the UAE steel market, relevant research has been conducted, and the situation is as follows:

1、 Damaged buildings in the United Arab Emirates:

3、 Impact on steel import and export transportation:

In the short term, the suspension of operations at Jebel Ali Port has led to a complete halt in steel loading and unloading. It is reported that Chinese steel exports to the United Arab Emirates are transported through two modes of transportation: general cargo and container. The former mainly passes through Jebel Ali Port, while the latter may be loaded and unloaded through multiple ports. In 2024, the throughput of Jebel Ali Port's general cargo was 5.4 million tons, a year-on-year increase of 23%. Steel is one of the main categories of general cargo, accounting for over 60% of approximately 3.24 million tons. In addition, about 50% of China's imported goods from the Middle East are transshipped through Jebel Ali Port, which is the core hub for China's steel exports to the United Arab Emirates. According to informed sources, there are currently over 200 ships under pressure at Jebel Ali Port. Some bulk cargo steel importers have applied to transfer ships bound for Jebel Ali Port and Abu Dhabi Port to Fujairah Port. Sharjah Port and Fujairah Port can still operate normally, but the transfer has caused severe pressure at Fujairah Port.

According to Maersk's announcement on March 1st regarding the diversion of ME11 and MECL routes, it is explicitly stated that due to the deteriorating security situation in the Middle East, the Suez route through the Strait of Mandeb will be suspended and diverted to Cape of Good Hope, resulting in an additional 10-15 days of travel. According to the route adjustment notice released by Hapag Lloyd, the diversion to Cape of Good Hope is expected to increase transportation costs by over 30%. According to Caixin News Agency on March 1st, the risk of the Strait of Hormuz has exploded, with insurance premiums on some routes rising by up to 50%, forcing ship owners to divert or suspend operations. According to data from the Shipping Industry Association, diverting from Cape of Good Hope reduces ship turnover efficiency by about 20%, which is equivalent to a 10-15% reduction in global effective capacity, further driving up freight rates. On March 1, 2026, MSC, the world's largest container shipping company, released a customer announcement on its official website, stating that as a safety precaution, all global new cargo bookings to the Middle East will be suspended until further notice. Overall, in the short term, there will be a surge in demand for shipping space and a significant increase in freight rates.

4、 The impact on steel prices

According to current feedback from the UAE market, local merchants are working from home, and inquiries about pricing have stalled. However, the ex factory price of rebar from ESI steel mills has risen to 2721 dirhams/ton, and the market price is even higher, ranging from 70-80 dirhams/ton higher than the end of February. Foreign resources from countries such as Saudi Arabia and Oman have been affected by the event, making it difficult for resources to flow in the short term and reducing low-priced resources. There is a risk of supply interruption for some specifications and steel billets of rebar in the future, and prices will further rise.