[SMM Hot Topic] Middle East Steel Export Flows Shift: Finished Products Stall and Steel Billet Counterattacks Looking back at 2025, the Middle East market was undoubtedly the most dazzling "emerging dynamic market" in China's overseas steel landscape. In 2025, China's total steel exports to the Middle East reached 15.81 million mt, with monthly shipments basically stable in the high range of 1.2–1.3 million mt. Against the backdrop of total annual steel exports of 134 million mt, up 14% YoY, the Middle East market accounted for 11%–12% of China's total overseas steel export share. This means that in a single geo-economic region, its share and strategic reliance were second only to Southeast Asia, serving as the "second largest core pillar" for China's steel going global. In terms of product mix, high-added-value HRC (29% share), steel pipes essential for oil and gas projects (18% share), and medium-thickness plates (14% share) formed the three dominant players, reflecting the region's strong diversified industrial and infrastructure throughput capacity. However, it was precisely due to such a massive trade base in 2025 and high reliance on conventional Persian Gulf shipping lanes that when geopolitical storms suddenly struck and straits were dramatically blocked, the resulting "broad market stall" and supply chain disruption were so severe. Below, we will analyze in order: the specific situation of China's steel exports to the Middle East, how cargo pressure was shifted through port replacements during the strait blockade, and how the export landscape will be reshaped after the latest US-Israel negotiations? The "Stall" and Structural Anomaly of China's Steel Exports to the Middle East Data Source: SMM, China's General Administration of Customs First, let's look at total export performance. According to SMM historical data and the latest customs export trends, China's total steel exports to the Middle East in the first four months of 2026 plummeted from 5.47 million mt in the same period of 2025 to 3.57 million mt, with April exports directly halving. Specifically, among China's 5.47 million mt of steel exports to the Middle East from January to April 2025, a highly advanced finished-product-oriented export characteristic was evident. HRC (29%), steel pipe (18%), coated steel (15%), and medium-thickness plates (14%) constituted the four mainstays of China’s steel trade. In terms of destination countries, Saudi Arabia’s rigid demand for offshore/oil & gas pipe (986,000 mt) and the UAE’s strong processing throughput of general HRC (1.607 million mt) and medium-thickness plates (779,000 mt) jointly established the traditional “dual-core consumption hinterland” within the Persian Gulf. Data source: SMM, General Administration of Customs of China Supply Shock and Physical Scissors Gap: The “Billet Export Bonanza” Under a Double Squeeze Since the start of 2026, the blockade of the Persian Gulf Strait caused by geopolitical conflicts significantly weakened overall shipments, while a dramatic “underlying mutation” simultaneously unfolded in the product mix. Steel billet, a minor product that previously accounted for only an 8% share (431,000 mt), registered a strong countertrend increase of 24% in the first four months of 2026. According to the SMM survey, the underlying driver of this anomaly originated from a localized supply shock induced by geopolitical shifts in Iran. If the closure of the Persian Gulf Strait severed the “aorta” of Middle Eastern steel imports, the sudden destruction of Iran’s two largest steel giants—Mobarakeh Steel Company (MSC) in Isfahan and Khuzestan Steel Company (KSC)—on March 27, 2026, completely ignited a “raw material upheaval” within the region. Iran is the world’s tenth-largest and the Middle East’s largest crude steel producer (accounting for over 50% of the region’s total crude steel output), with annual steel exports exceeding 10 million mt, among which semi-finished steel billets are the absolute mainstay. Mobarakeh (MSC) has an annual capacity of 11.8 million mt (20% of Iran’s total capacity), making it the undisputed “King of Flat Products/Sheets & Plates” in the Middle East; Khuzestan (KSC) is Iran’s second-largest steel producer and its most critical production base for slabs and billets. Data source: SMM, General Administration of Customs of China Under normal conditions, Iran was the primary supplier of low-priced steel billets to local rolling mills in the Middle East. With the sharp contraction in Iran's external supply, rolling mills in the Middle East, particularly in Oman and parts of the UAE outside the Gulf that were not directly affected by the blockade, faced severe raw material supply disruption risks. To maintain production, local buyers quickly released a large number of urgent inquiries to the international market. According to SMM survey, the huge demand gap for steel billets created by Iran's exit was filled and shared by supplies from China, India, and Russia. Because the local shortage was mainly crude steel raw material for rolling sheets and plates, and the equipment destruction from explosions meant that rolling lines were the first to restart, the main incremental product in these counter-trend orders was steel slab. This situation shares similarities with the article at https://mp.weixin.qq.com/s/bsrZaRRSRDHC_FmGLulJOQ (Middle East turmoil triggers "mismatch", China accelerates filling a supply vacuum of about 2.3 million mt in Southeast Asia), which mentioned that China would accelerate taking over steel billet supply gaps. That is, despite the decline in steel exports this year, billet exports also achieved counter-trend growth. Stock Game: The "X-Shaped Crossover" of Inside-Gulf Shutdowns and Outside-Gulf Safe Havens Verified by SMM through freight forwarders, steel trade (especially medium-thickness plates, pipes, and steel billets) relies heavily on bulk or breakbulk vessels. When container liners encounter blockades, they can easily reroute by amending bookings via computer systems, but the diversion of bulk carriers faces rigid constraints from destination port drafts, specialized handling equipment (such as large quay cranes), and inland truck connections. Therefore, over the past two months, the supply chain staged a dramatic "port drift" inside and outside the Persian Gulf. The following uses SMM's panoramic shipping data to explain in detail the changes in cargo flow between ports. Under normal conditions, over 70% of China's steel shipments to the Middle East converged densely on Jebel Ali Port inside the Persian Gulf and Dammam Port on the eastern coast of Saudi Arabia. But after the strait blockade, steel port arrivals at these two traditional hubs showed a historic "physical shock" in SMM's high-frequency shipping data (falling to zero from April to May). Meanwhile, the diverted cargo, fighting to survive, surged wildly toward alternative ports outside the strait, tearing open a "lifeline of safety" spatially: ① "Overload Surge" at Oman's Port of Sohar: As the most critical cross-border multimodal transshipment hub outside the Gulf, its port arrivals in April surged nearly fivefold MoM. Large batches of Chinese HRC and steel billet originally destined for the inner Gulf were forced ashore here, causing massive congestion at the port in May as cross-border heavy truck capacity collapsed. ② "Western Route Counterflow" at Saudi Arabia's Jeddah Port: Saudi Arabia abandoned its eastern sea route (Dammam Port) nationwide, forcibly redirecting all Chinese orders to Jeddah on the Red Sea side, causing its throughput to surge to a peak of 361,000 mt in April. Source: SMM, Google Maps However, it should be noted that while cargo can be transferred via other ports in the short term, port arrivals in May have already shown a weakening trend again. The reason is that alternative ports outside the Gulf simply cannot handle such massive and concentrated cargo volumes, leading to extremely severe congestion. According to SMM's survey, because navigation within the Gulf is no longer possible, some shipping lines originally bound for Jebel Ali had to divert to Fujairah, but are still queuing for berths. Jeddah Port faces similar issues. With tight capacity, prices keep surging, and transportation faces severe obstacles. Source: SMM Outlook for Change: With the US-Iran blockade-lifting deal, what impact will the shipping supply chain face? After 108 days of the "dual blockade" (Iran's blockade of the strait and the US's counter-blockade of Iranian ports) that gripped the lifeline of global energy and commodities, the US and Iran officially issued successive high-profile statements announcing a ceasefire memorandum of understanding. The relevant timeline is summarized below. Data source: Compiled by SMM from public channels The news, once released, triggered a strong market reaction. On one hand, there are expectations for export increments from shipping recovery; on the other hand, there are certain demand expectations for post-disaster reconstruction. According to the latest SMM survey, most exporters have not responded enthusiastically to the lifting of the blockade and remain skeptical about its actual implementation. Therefore, from the perspective of actual order-taking, shipments to the Middle East still need 3 to 4 weeks to be verified. If a full lifting is confirmed, the "demand backlog" caused by the earlier shipping disruptions will see a concentrated release. Based on past customs data and the local supply-demand balance table, SMM roughly predicts that finished steel products will experience strong growth expectations, potentially filling a disaster-induced gap of approximately 1.7-2.1 million mt. Among them, HRC accounts for the highest proportion (29%) of China's finished steel exports to the Middle East. Although the Middle East's largest flat steel giant, Iran's Mobarakeh Steel Company (MSC), has reported production resumptions for its blast furnace previously damaged by war, its capacity is in a post-disaster repair phase and is not expected to fill the local gap in the short term. However, recent market rumors suggest that Indian resources are seizing the Middle Eastern market at lower prices, which will also pose some impact on China's export order-taking. However, for semi-finished products, the reason Chinese steel billets have been "hot" in recent months is the supply gap caused by the strait blockade and the bombing of Iranian steel mills. Once Iran's logistics fully recover, Chinese steel billets will lose their advantage in absolute price, logistics distance, and surrounding multilateral competition, and the demand gap in Southeast Asia previously filled by substituting Iranian sources may also be reclaimed. Recently, according to SMM surveys, billet resources are already circulating in the Middle Eastern market. Through the following comparison of comprehensive landed costs (CFR) for billets in the Middle East, it can be clearly seen that Chinese resources are under comprehensive pressure: Therefore, steel billet exports to the Middle East are expected to be somewhat limited, with competition only possible at lower prices. Preliminary forecasts indicate a pressure reduction of 50,000–250,000 mt. However, we need to broaden our perspective to the global multilateral trade context, and we must not fall into excessive pessimism due to localized marginal reductions. Although the billets exported to the Middle East are under pressure, the incremental steel billet volumes that previously replaced Iranian exports to Southeast Asia may not necessarily be wiped out. Given the uncertainty of the Middle East situation and based on considerations of a more stable supply chain, Southeast Asian buyers may continue to source from Chinese suppliers. Therefore, against the backdrop of an overall steel recovery and resilience in steel billet prices, SMM maintains its earlier view, holding a moderately optimistic stance on annual steel exports, with expectations of "steady incremental growth." Finally, it needs to be added that, currently, due to severe port congestion, even if the strait is confirmed passable, it will still take a long time for actual cargo to arrive and cannot immediately be reflected in the data. At the same time, ocean freight rates will also maintain high-level fluctuations in the short term due to unfavorable port cargo pick-up. 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Hoa Phat’s 2025 results marked a major step-up driven by the ramp-up of Dung Quat 2, pushing crude steel output above 11 million tons and lifting earnings through higher volumes and cost dilution despite weak global steel prices. Growth was supported by stronger HRC and downstream sales, a rising export mix, and continued domestic dominance. The year also signals a strategic shift toward higher-value products and future capacity expansion into rail and special steels.

At 4:15 PM on June 8, 2026, a ladle explosion at the SMS-1 steelmaking shop of Visakhapatnam Steel Plant (VSP) — operated by Rashtriya Ispat Nigam Limited (RINL) — unleashed molten metal at over 1,500°C onto the working platform below Caster-2. According to a preliminary report by India's Chief Inspector of Factories, the cause was a sudden release of gas entrapped within the liquid steel, which ruptured the ladle seal before the sliding gate was opened, triggering a catastrophic spill.

【SMM Steel】JSW Steel's May consolidated crude steel output rose 15% y-o-y to 2.29 million tonnes driven by full operations at its Dolvi facility which had planned maintenance last year and the complete ramp-up at JVML. Domestic output rose to 2.19 million tonnes from 1.9 million tonnes while its US Ohio plant output climbed 20% to 95000 tonnes. Excluding the ongoing shutdown of BF3 at Vijayanagar for expansion domestic capacity utilization reached approximately 98%. JSW Steel had reported April crude steel output of 2.12 million tonnes down 1% y-o-y.

According to the Brazil Steel Institute (Aço Brasil), Brazil's finished steel trade deficit compressed sharply by 59.2% year-on-year during the first five months of 2026, dropping to 503,000 metric tons (mt) from 1.23 million mt in the same period of 2025. Cumulative finished steel imports for January-May 2026 fell by 21.6% year-on-year to 1.41 million mt, while domestic sales by Brazilian mills advanced by 6.7% year-on-year to 8.08 million mt, elevating total apparent domestic consumption to 9.07 million mt. Crude steel production for the period registered a 4.7% increase to 14.15 million mt, whereas total exports contracted slightly by 1.8% to 906,000 mt. The market impact highlights the immediate protective efficiency of Brazil’s newly deployed 25% tariff-rate quota (TRQ) system and anti-dumping measures. By successfully turning back low-priced import volumes, these trade blocks have redirected bulk procurement back to domestic mills, allowing local steelmakers to secure their home market share and stabilize regional pricing baselines despite challenging global demand headwinds.

On June 9, customs data showed that China exported 10.341 million mt of steel in May 2026, an increase of 844,000 mt MoM, up 8.9% MoM. Cumulative exports from January to May reached 44.554 million mt, down 8.1% YoY. China imported 451,000 mt of steel in May 2026, a decrease of 14,000 mt MoM, down 3.1% MoM. Cumulative imports from January to May totaled 2.255 million mt, declining 12.2% YoY. Table1 – Steel Import and Export Data Overview, January-May Source: SMM Steel Exports in May Crossed 10 Million mt MoM According to SMM's export schedule survey for May, planned HRC exports that month stood at 1.1435 million mt, up 213,500 mt from actual April exports, a 23% MoM increase. Meanwhile, SMM export order data showed that from March to April, domestic export prices held a strong advantage in international markets, and overseas demand for semi-finished products remained present. Export orders reached a periodical high in mid-April, providing some support for May exports exceeding 10 million mt. Table 2– China Total Steel Exports Source: SMM Steel Imports in May Declined MoM On the import side, steel imports stood at 451,000 mt in May, edging down MoM. From January to May, China imported a total of 2.255 million mt of steel, down 12.2% YoY; net steel exports reached 42.299 million mt. Short-Term Steel Export Outlook 1. Global manufacturing diverges notably; US accelerates sharply while domestic new export orders slide from highs Global manufacturing activity showed marked divergence in May 2026. The latest PMI data indicates the US accelerated strongly, rising to 54% from 52.7% in April, though cost surges driven by inflation posed significant headwinds. The Eurozone PMI dropped to 47.5% from 48.8%. India continued to demonstrate resilience: its May manufacturing PMI reached 55%, a three-month high, fueled by robust domestic demand, infrastructure spending, and new business growth. China's new export orders index came in at 48.6% in May, down 1.7 percentage points MoM, reflecting some weakening in export demand. 2. Overseas supply continues to decline, particularly evident in the Middle East World Steel Association data shows global crude steel production fell 1.9% YoY to 153.4 million mt in April 2026. Excluding China, output in the rest of the world slid 4.25% MoM, with production schedule paces diverging significantly across regions. Among markets outside China, India and Vietnam maintained high production levels, mainly benefiting from the structural ramp-up dividends brought by new capacity commissioning. Meanwhile, the US and Germany also stood out in April: the US was directly boosted by seasonal Q2 production schedule expansions in high-end manufacturing sectors such as automobiles, while Germany's four consecutive months of production rebound essentially reflected a strategic inventory build by steel mills in response to raw material price fluctuations. In contrast, Middle East production continued its steep YoY plunge during the month, mainly attributable to wartime energy controls and systemic logistical paralysis triggered by the US-Iran conflict and the full closure of the Strait of Hormuz. Overall, Middle East output remains in contraction. As original recipient countries face a lack of stable supply sources, coupled with the digestion of previous low-priced resources, China's steel export orders may encounter structural opportunities. Figure 1 – Global Crude Steel Production by Region Source: SMM 3. Price advantage remains notable, but Southeast Asian markets show price-cutting behavior to seize market share As of June 5, 2026, HRC export quotations (FOB) from India, Turkey, and the CIS stood at $550/mt, $645/mt, and $535/mt, respectively, while China's HRC export quotation (FOB) was $501/mt. China's HRC export quotations currently stand at discounts of -$49/mt, -$144/mt, and -$34/mt against these countries, keeping its steel export price advantage distinct. Recently, however, Southeast Asia entered its off-season; with domestic demand unable to support elevated prices, there are signs of price reductions to capture orders from the international market and disperse domestic pressures. The price spread between China and Southeast Asia has narrowed somewhat. Figure 2 – HRC Quotations in Key Global Markets Source: SMM 4. Export orders dropped notably in May, with a related slowdown after concentrated procurement According to SMM's latest survey of steel mill export schedules, planned HRC exports this month stand at 1.03 million mt, roughly steady compared with actual exports last month. SMM steel export order data indicates that, affected by holidays, export orders in May declined noticeably from April on a MoM basis. Orders for both flat products and long products slipped, signaling that overseas buyers have slowed their procurement pace after the earlier round of concentrated procurement. Figure 3 – SMM Steel Export Order Volumes Source: SMM 5. HRC faced the most cases entering the enforcement stage in May After the concentrated final rulings of anti-dumping cases in April, anti-dumping cases decreased somewhat in May, involving products including HRC, coiled rebar, section steel, and steel pipes. Specific cases and their affected volumes are shown in the table below: Table – New Anti-Dumping Cases in May Source: SMM Taking all factors into consideration, as the new export orders index narrows somewhat, Southeast Asian markets cut prices to compete for orders, and the significant contraction in export order volumes over the previous two months gradually feeds through to the shipment stage, the cushioning effect from earlier orders will weaken considerably. SMM expects that actual total steel exports in June will face some downward pressure. At the same time, as overseas supply of previously low-priced materials is absorbed and Chinese prices remain competitive, domestic export orders may show a bottoming-out recovery trend. Recent feedback from the Southeast Asian market also indicates new procurement demand for semi-finished products. Figure 4 – Steel Exports and Forecast, 2024-2026 Source: SMM Disclaimer on Data Sources: Except for publicly available information, all other data herein are processed and derived by SMM based on publicly available information, market communication, and SMM's internal database models. The content is for reference only and does not constitute decision-making advice. Note: This article is an original work published on this official account. For requests regarding reproduction, whitelist access, cooperation, or other matters, please contact us. Without permission, the content shall not be reproduced, modified, used, sold, transferred, displayed, translated, compiled, disseminated, or otherwise disclosed to third parties or licensed for third-party use. 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