Chinese exporters of hot rolled coil (HRC) are facing growing disruptions in shipments to the Gulf region as escalating tensions involving the United States, Israel and Iran create uncertainty around maritime logistics through the Strait of Hormuz, one of the world’s most critical energy and trade corridors.
According to market sources, Chinese mills have largely suspended new offers to Gulf buyers as freight conditions and marine insurance costs have become increasingly unpredictable. Freight rates for shipments to the region have reportedly increased by around $10/mt, bringing total transport costs to approximately $50–55/mt for large HRC cargoes.
Shipping risks have also affected vessels already en route to the region. Industry participants said that some ships approaching the Gulf were forced to divert or wait outside the Strait of Hormuz, adding further logistical complications.
Operations at Jebel Ali Port in Dubai, the largest port in the Middle East, have also been affected, with security concerns reportedly leading to reduced staffing levels at logistics facilities across the UAE.
As a result, trading activity has largely stalled, with neither firm offers nor bids currently circulating in the market as buyers and suppliers wait for clarity on the geopolitical situation.
Despite declining in recent years, the Gulf remains a strategically important market for Chinese steel producers. According to trade data, China exported around 3.88 million mt of HRC to Gulf countries and Iran last year, representing a 20.8 percent decline year on year. However, the volume still exceeded shipments from Japan and South Korea, highlighting the region’s importance.
Overall, China exported approximately 21.5 million mt of HRC globally, with about 17 percent shipped to Gulf markets, according to data from the China Customs Administration. Among key destinations, the UAE imported about 1.33 million mt, while Saudi Arabia purchased roughly 1.96 million mt of Chinese HRC.
The disruption could create additional pressure for Chinese mills, which are already struggling with weak domestic demand due to the prolonged downturn in China’s property sector.
If shipping disruptions persist, exporters may attempt to redirect cargoes to South Asia, Africa or Latin America, potentially increasing competition and pushing global HRC export prices downward.
At the same time, alternative transport routes through Central Asia or land corridors could be explored, though these options would involve significantly higher logistics costs.
Market participants noted that uncertainty surrounding the conflict is already affecting buyer sentiment beyond the Middle East.
For now, Chinese mills, Gulf buyers and shipping companies are closely monitoring developments, while the timeline for a recovery in normal trade flows remains unclear.
The situation comes at a time when Chinese HRC exporters are also facing growing barriers in other key markets. Vietnam, traditionally the largest importer of Chinese HRC at around 4.5 million mt annually, has introduced anti-dumping duties and stricter regulatory measures, making the market less accessible for Chinese producers.
Against this backdrop, prolonged disruption to Gulf shipments could further complicate China’s export outlook, potentially forcing more steel supply back into the domestic Chinese market.
VietnamSteel by Hoa Sen Group
