The United Kingdom government officially launched a new national Steel Strategy on March 19, 2026, aimed at domesticating 50% of the nation's steel consumption, up from the current 30%. As part of this robust trade defense, the UK will reduce tariff-free import quotas by 60% effective July 1, 2026, while raising the maximum Most Favored Nation (MFN) tariff to 50% for imports exceeding these limits. This move is designed to shield the domestic industry—currently transitioning from traditional blast furnaces to electric arc furnaces (EAF)—from global overcapacity and extreme subsidies.

[SMM Analysis] Persian Gulf Shutdown? The Impact of the U.S.-Iran Conflict on Global Steel Trade On February 28, 2026, the conflict between the United States and Iran escalated into a full-scale outbreak, causing a sudden spike in Middle Eastern geopolitical tensions. As a global chokepoint for energy and bulk commodity maritime transport, the Strait of Hormuz has seen shipping disrupted and routes tightened, directly impacting the nerves of the global supply chain. This "Golden Waterway" is not only a lifeline for oil but also a critical strategic corridor for the global steel import and export trade . Once passage is restricted, it will deliver a comprehensive shock to the international steel trade landscape. Amidst the turmoil of war, what disruptions and restructuring will the global steel trade face? SMM's latest research provides an in-depth analysis. In the short term, the U.S.-Iran conflict poses a risk of stalling steel imports and exports in the Persian Gulf region, putting pressure on China's steel exports. Multiple disruptions along Gulf shipping routes have caused significant delays in exporters' orders. According to SMM research, the current Middle East situation has disrupted multiple ports in the Gulf region. Bahrain has suspended port activities, including pilotage services. Jebel Ali Port has halted all operations due to a fire caused by intercepting airstrike debris. Qatar's Ras Laffan and Messaid ports remain operational but with reduced traffic, GPS signal interference, and the government closure of its airspace. Similarly, new orders and shipments for Chinese exporters have also been significantly hindered. Data Source:SMM Impact Assessment of Core Ports within the Strait of Hormuz Should a physical blockade occur at this strategic chokepoint, the five most directly affected key inner-bay ports experiencing “instant logistics paralysis” would be: Port of Bandar Abbas, Port of Khomeini, Port of Jebel Ali, Port of Khalifa, and King Abdullah Port. Simultaneously, a Strait blockade would threaten to disrupt approximately 10% of global seaborne steel trade (primarily semi-finished products and specialty ores) . Iran's production of direct reduced iron (DRI) also holds significant weight in global supply; any disruption could drive up costs for electric arc furnace steelmaking in the Middle East. Data Source: SMM Ferrous Metal Shipping After the blockade, will goods become completely impossible to transport? While maritime routes will indeed come to a near standstill, the flow of goods won't cease entirely. It will simply become extremely costly, slow, and require complex overland transshipment. For instance, strategic alternative ports outside the strait include Sohar Port, Chabahar Port, and Gwadar Port. Data Source: Compiled by SMM based on publicly available information Trade Chokehold Triggered by Insurance Withdrawals Equally severe as the strait blockade is the withdrawal of war risk insurance. Marine insurers Skuld and Gard have announced they will cancel war risk coverage due to escalating tensions in the Middle East. Local feedback from the UAE indicates most insurers refuse to underwrite war risk insurance for the Red Sea. This means traders must bear multiple uncontrollable factors and assume all consequences, which will significantly impact new orders. Summary: The Hormuz Crisis's “Hedging Effect” on China's Steel Market Leads to Short-Term Export Pressure Short-Term Negative Impact (Suppression of Demand and Logistics): The sudden halt in Gulf shipping routes will cause China's total exports to Middle Eastern countries like Saudi Arabia and the UAE to plummet dramatically. Export disruptions may even force resources to flow back into the domestic market, intensifying supply pressure and exerting downward pressure on steel prices. Data Source: SMM, GACC Mid-term outlook: As a major steel supplier, Iran's halted exports will trigger tightening supply of steel billets in Southeast and South Asia. From Construction to Industry: Iran's Steel Export Structure Transformation and the Peak Era Dominated by “Billet” According to data released by the Iranian Steel Producers Association (ISPA), 2025 marked the “peak era” for Iran's steel exports, with its export structure exhibiting an extremely aggressive trend: ① Absolute Dominance of Semi-Finished Products: From March to December 2025, Iran's billet exports reached 4.58 million tons (+37.7% YoY), while slab exports hit 1.54 million tons (+44.6% YoY). This confirms the earlier observation that the current strait blockade will trigger significant “slab panic” among downstream steel mills in Southeast Asia and the Middle East. ② Structural Leap in Flat Products: Finished flat product exports surged from 307,000 tons in the same period last year to 1.03 million tons. Notably, the significant increase in hot-rolled coil (867,000 tons) and coated steel (up 76.7% YoY) indicates Iran's gradual transition from a “construction steel supplier” to an “industrial raw material supplier.” ③ Weakness and contraction in long products: In contrast, exports of finished long products (rebar, wire rod) declined by 9.9%, while structural steel exports plummeted by 27.7%. This trend of “reducing long products while increasing flat products” has, against the backdrop of stalled infrastructure projects, actually heightened the risk of inventory buildup for finished goods. Data Source: ISPA Mid-term positive factors: Cost and substitution support Iran's steel export shortfall of nearly 11 million tons will trigger regional supply tightness, forcing some Southeast Asian and South Asian buyers to shift procurement to China, creating “substitution-driven incremental demand.” Simultaneously, rising crude oil prices may push up costs across the entire industrial chain, providing bottom-up support for steel prices. Although logistics disruptions and project suspensions will suppress export performance in the short term, the reshuffling of the global supply landscape is expected to partially offset the negative impact. Chinese steel may play a key role in filling the global gap. Long-term outlook: Iran's ceasefire may temporarily impact the global steel market Hoarding effect under blockade: Iran's sharply rising mill and port inventory pressures According to the latest global steel statistics report released by the World Steel Association (WSA), Iran's cumulative crude steel production reached 31.8 million tons in 2025, marking a year-on-year increase of approximately 1.4% compared to 2024 and solidifying its position as the world's tenth-largest steel producer. In December 2025, Iran's monthly crude steel output hit 3 million tons, a significant year-on-year increase of 16.2%. This indicates that Iranian steel mills were operating at peak capacity just before the conflict erupted. In January 2026, its crude steel output reached approximately 2.6 million tons, marking a 15.1% year-on-year increase. Against the backdrop of a 6.5% year-on-year decline in global crude steel production during January, Iran demonstrated an “independent trend.” According to SMM research, the high production levels from earlier periods have led to severe inventory backlogs at domestic steel mills. The logistics blockade that began in late February prevented the full shipment of steel produced during this high-output phase out of the Persian Gulf. Consequently, ports and mill warehouses are now stockpiling large quantities of slabs and billets originally intended for export. Once the situation eases, this “low-priced inventory” could flood the market at dumping prices. However, considering Iran's post-ceasefire reconstruction needs and the actual release of these supplies, SMM will continue to monitor developments closely. Copyright and Intellectual Property Statement: This report is independently created or compiled by SMM Information & Technology Co., Ltd. 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The champagne corks in Brussels may have popped too soon. On January 14, 2026, the European Commission released a soaring press statement celebrating the official entry of the Carbon Border Adjustment Mechanism (CBAM) into its "Definitive Regime." In the official narrative, this was a triumph of digitalization: over 10,000 customs declarations verified in real-time, with the system running as smooth as silk. However, if we shift the lens from the desks of Brussels to the customs brokers in Hamburg, the steel traders in Rotterdam, and the customs officials currently drowning in paperwork across the continent, a starkly different picture emerges. What we are witnessing is a carefully whitewashed administrative "cardiac arrest." Forensic-level investigation into the first seven weeks of 2026 reveals that the landing of CBAM is far from the glitz claimed by officials. On the contrary, plagued by suspected low-level data errors, catastrophic approval backlogs, and teetering temporary patches, the mechanism is currently mired in a dual crisis of legality and operations. I. The Absurd "Default Values": When Taiwan’s Stainless Steel "Became" Indonesian Coal If one were to find a single representative footnote for this chaos, the "Default Value Controversy" would be the undisputed choice. For importers unable to obtain precise carbon emission data from upstream factories, the EU’s official "default values" are a lifeline. This was supposed to be a baseline derived from rigorous scientific calculation. Yet, in the 2,400-page document released on December 31, 2025, mere hours before the new rules took effect, industry experts witnessed a jaw-dropping scene. This is not merely a margin of error; it looks more like a metallurgical farce. Industry bodies have pointed out that when the Directorate-General for Taxation and Customs Union (DG TAXUD) established the carbon emission default values for stainless steel from the Taiwan region, the data tables contained suspected structural errors, bearing traces of a "copy-paste" job from Indonesian data structures. The consequence? In the physical world, processing a steel slab into a precision tube requires significant electricity, meaning the finished product should logically have higher emissions than the semi-finished one. Yet, in the table published by the EU, industry players have flagged phenomena where "Taiwanese semi-finished stainless steel allegedly emits more than the finished product," vehemently questioning its rationality. In metallurgy, this is impossible; in a bureaucratic Excel sheet, it became legal reference. More fatally, Taiwan’s stainless steel industry relies primarily on Electric Arc Furnaces (EAF) and scrap recycling, resulting in a relatively low carbon footprint. In contrast, the Indonesian stainless steel industry is highly dependent on Nickel Pig Iron (NPI) and coal-fired power, yielding extremely high emissions. This suspected "slip of the hand" by the EU is akin to forcefully assigning the calorie count of a rich braised pork belly to a light garden salad. This has directly resulted in European buyers of Taiwanese stainless steel facing artificially inflated financial costs. II. A 27% Pass Rate: The 15,000-Strong Army Blocked at the Gate If data controversies are "soft tissue damage," the backlog in administrative approval is a fatal "compound fracture." The core rule of the CBAM definitive stage is simple: without "authorized declarant" status, you cannot import. This means every company wishing to ship a screw or an aluminum sheet into Europe must first secure an "entry ticket." The reality is brutal. According to the Commission’s official press release, by January 7, over 12,000 operators across the EU had submitted applications, with just over 4,100 approved (a pass rate of roughly 34%). However, industry estimates suggest that by late February, applications swelled to approximately 15,000, causing the pass rate to slide to around 27%. Where did the massive remainder go? They are stuck in the overwhelmed approval systems of National Competent Authorities (NCAs). In Germany, due to the deluge of applications, logistics giant DSV issued a public notice stating it could not support clients with CBAM authorization and registration, bluntly forcing thousands of SMEs to crash into the complex reporting system like headless flies. In France, the labyrinthine digital authentication process has turned the application into a maze only a hacker could navigate. To prevent European ports from paralysis, the EU was forced to administer a "painkiller": Customs Code Y238. This is a temporary "hall pass" allowing companies that applied before March 31 but have not yet been approved to keep goods moving for now. But make no mistake, this merely lengthens the fuse on the bomb. III. The Strategy of Silence and the Risk of "Retroactive Reckoning" Faced with industry skepticism, Brussels seems to have chosen the oldest PR strategy: silence. Although industry giants like the Gerber Group issued detailed technical warnings as early as January 9, pointing out the absurdity of the Taiwan/Indonesia data, the industry notes that as of late February, no official "Corrigendum" has been issued to legally revise the default values. The updated Excel version released on February 13 merely added a disclaimer: "information only." This rigid attitude transfers all risk to the enterprises. For companies currently relying on the Y238 temporary arrangement, the real danger is not "whether goods are released," but "whether they will be retroactively penalized." Competent authorities have publicly warned that if an authorization application is ultimately rejected, member states can, under Article 26 (2)/(2a) of the CBAM Regulation, retroactively penalize goods imported during the waiting period. Such fines can, in certain cases, reach 3 to 5 times the standard penalty. In other words, this is not a procedural flaw; it is a compliance risk that could land directly on cash flows and balance sheets. Conclusion: Who Pays the Price for Hubris? CBAM was supposed to be the crown jewel of the EU’s climate ambition, a lighthouse for global green trade. But the opening scene of 2026 makes it look more like an unfinished Tower of Babel. From the "data ghosts" haunting the industry to the severely backlogged approval channels, this "hard landing" exposes a chasm between regulatory ambition and administrative capability. For European importers, every day now is an exercise in navigating through fog. They are forced to calculate not just carbon emissions, but the cost of policy uncertainty. And for the European Commission, if it cannot step out of this arrogant "silence" and clarify these glaring operational controversies, what CBAM loses will be more than just data accuracy; it will be the trust of its global trading partners.

This week, ferrous metals were in the doldrums. There were no significant macro disturbances during the week. The pullback in the US dollar index led to a rebound in nonferrous metals and the A-share market, but ferrous metals did not follow the trend noticeably. Instead, pressure from bears weighed on finished steel prices. On the spot market, most markets have already entered a holiday shutdown. Spot prices remained basically stable, while market transactions contracted sharply...

【SMM Steel】UK-based company Binding Solutions has reached an agreement with Mitsui Iron Ore Development to produce low-carbon iron ore pellets in Western Australia's Pilbara region. The company's technology significantly reduces energy consumption and CO2 emissions compared to conventional pellet production processes. The partnership will utilize a low-energy cold agglomeration process to transform lower-grade iron ore fines into higher-value pellets. These pellets are suitable for electric arc furnace steelmaking, supporting steelmakers' decarbonization efforts. Binding Solutions has previously conducted industrial trials with producers such as British Steel and aims to build an industrial-scale production plant.

【SMM Steel】Colorado-based low-carbon iron startup Electra has developed a chemical and electric process producing 99% pure iron from ore, claiming 30% reduction in steel's carbon footprint. The clean iron can be used in electric arc furnaces for steelmaking or applied in iron-based batteries. The company this week signed purchase agreements with major industry players including Meta, Nucor and Toyota Tsusho America, with plans to commence operations at its demonstration plant in mid-2026 targeting annual production of 500 metric tons of low-emission iron.