[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. (hereinafter referred to as "SMM"), and SMM legally enjoys complete copyright and related intellectual property rights. The copyright, trademark rights, domain name rights, commercial data information property rights, and other related intellectual property rights of all content contained in this report (including but not limited to information, articles, data, charts, pictures, audio, video, logos, advertisements, trademarks, trade names, domain names, layout designs, etc.) are owned or held by SMM or its related right holders. The above rights are strictly protected by relevant laws and regulations of the People's Republic of China, such as the Copyright Law of the People's Republic of China, the Trademark Law of the People's Republic of China, and the Anti-Unfair Competition Law of the People's Republic of China, as well as applicable international treaties. Without prior written authorization from SMM, no institution or individual may: 1. Use all or part of this report in any form (including but not limited to reprinting, modifying, selling, transferring, displaying, translating, compiling, disseminating); 2. Disclose the content of this report to any third party; 3. License or authorize any third party to use the content of this report; 4. For any unauthorized use, SMM will legally pursue the legal responsibilities of the infringer, demanding that they bear legal responsibilities including but not limited to contractual breach liability, returning unjust enrichment, and compensating for direct and indirect economic losses. Data Source Statement: (Except for publicly available information, other data in this report are derived from publicly available information (including but not limited to industry news, seminars, exhibitions, corporate financial reports, brokerage reports, data from the National Bureau of Statistics, customs import and export data, various data published by major associations and institutions, etc.), market exchanges, and comprehensive analysis and reasonable inferences made by the research team based on SMM's internal database models. This information is for reference only and does not constitute decision-making advice. SMM reserves the final interpretation right of the terms in this statement and the right to adjust and modify the content of the statement according to actual circumstances.

According to SMM shipping data, as of May 31, the total port departures from Chinese ports in May were 11.6071 million mt, a 6.52% MoM decrease from April. The main reason for the discrepancy with customs data may be the decrease in billet exports MoM in May. Considering that major export traders and steel mills often set annual export targets, even in adverse external conditions, there may be instances of volume discounts. Therefore, SMM expects that steel export volume in June will still maintain high growth YoY, but MoM data may face a slight decline risk after three consecutive months of exceeding 10 million mt. The uncertainty of steel exports in H2 will increase.

According to SMM shipping data, as of May 31, the total port departures from Chinese ports in May reached 11.6071 million mt, down 6.52% MoM from April. The main reason for the discrepancy with customs data may lie in the decrease in billet exports MoM in May. Considering that major export traders and steel mills typically set annual export targets, even in adverse external environments, there may be instances of volume discount. Therefore, SMM expects that steel exports will continue to maintain high YoY growth in June. However, based on MoM data that has exceeded 10 million mt for three consecutive months, there may be a risk of a slight decline. Moreover, the uncertainty surrounding steel exports in H2 has clearly increased...

[Commentary on SMM Steel Import and Export Data] China's steel exports surged past 10 million mt again in April! Will May really witness a "Waterloo"? In April, China's total steel exports increased by 0.1% MoM. Although it still exceeded 10 million mt, the growth rate slowed down significantly. On April 9, US President Trump suddenly announced a 90-day suspension of new tariffs on over 70 countries and regions, excluding China, while only raising tariffs on China to a historic 125% (later corrected to 145%). Therefore, the increase in April was more pronounced during the 90-day exemption period for the US, with Chinese export enterprises "scrambling for re-exports". Additionally, there were market rumors at the time that starting from May 1, relevant tax payment certificates would be required for export customs declarations, and the phenomenon of domestic buyers rushing to export remained prominent, keeping the total export volume at a high level.

In recent years, the domestic real estate market has taken a sharp downturn, and infrastructure has struggled to provide effective counterbalance. Overall demand for long products has been sluggish. In the domestic market environment characterized by cut-throat competition, steel mills have been actively seeking new avenues, setting their sights on overseas markets. From 2020 to 2024, billet exports have continuously increased, rising from the level of 10,000 mt to the level of 1 million mt...

The US’s arbitrary tariff actions have led to a tendency for other overseas markets to follow suit. According to SMM’s latest steel mill export scheduling, planned exports in March fell by 3.5% compared to actual exports in February. However, overseas supply has not yet surged, and China’s export order-taking has improved. Therefore, despite the expansion of overseas barriers, the decline in exports has been better than expected. Meanwhile, domestic crackdowns on "fake exports" are strict, with rumors that export declarations will require relevant tax payment certificates starting May 1, leading to a continued "rush to export" phenomenon domestically. According to SMM shipping data, as of April 11, China’s port departures in April totaled 6.2278 million mt. Considering that major export traders and steel mills often set annual export targets, "volume discount" scenarios may still exist even in adverse external conditions. SMM expects steel exports in April to decline slightly from the high base of the previous month, but the decline may be limited! A more significant drop in exports may be seen in May!

Summary of Steel Import and Export Data According to data released by the General Administration of Customs on April 14, China's steel exports in March 2025 reached 10.456 million mt. The cumulative steel exports from January to March totaled 27.429 million mt, up 6.3% YoY. In March, China's steel imports were 501,000 mt. The cumulative steel imports from January to March amounted to 1.55 million mt, down 11.3% YoY.

China's stainless steel import and export market dynamics in February 2025. Imports, affected by the Chinese New Year holiday and downstream demand, saw a decline both MoM and YoY, with a slight decrease in the share of imports from Indonesia and varying changes in the volume of different product forms. Prices fluctuated rangebound due to raw material factors. Exports, on the other hand, experienced a significant drop MoM but an increase YoY; growth in demand from emerging sectors did not fully offset the impact of weakness in the construction industry, and a complex international trade environment posed numerous challenges for exports. It is expected that there will be changes in both stainless steel imports and exports in March, with a long-term supply-demand imbalance persisting globally.

SMM Analysis: Changes in Stainless Steel Import and Export Markets After Chinese New Year in February 2025, Tug-of-War Between Sellers and Buyers Continues Globally In February 2025, the dynamics of China's stainless steel import and export markets showed that imports, influenced by the Chinese New Year holiday and downstream demand, decreased both MoM and YoY. The share of imports from Indonesia slightly declined, with varying changes in the volume of different product forms. Prices fluctuated rangebound due to raw material factors. On the export side, the volume dropped significantly MoM but increased YoY. The growth in demand from emerging sectors did not fully offset the impact of weakness in the construction industry. The international trade environment was complex, posing many challenges for exports. It is expected that there will be changes in both imports and exports of stainless steel in March, with a long-term supply-demand imbalance persisting globally.

According to a survey by the World Steel Association (WSA), the main reasons for the consistently low steel capacity utilisation rate in Thailand are due to the reliability, efficiency, and cost of steel mill production. In 2024, the local steel capacity utilisation rate in Thailand was less than 30%, still requiring a large amount of imports to meet domestic steel demand, placing the country in a net import position. At the same time, the absolute value of per capita crude steel consumption in Thailand remains at a relatively low level, with significant room for growth. The local crude steel capacity utilisation rate is low, and in January 2025, the Board of Investment (BOI) of Thailand announced the latest version of the investment promotion guidelines, stating that applications for new long and flat steel product projects would be cancelled, allowing only existing projects to apply for investment incentives based on smart and sustainable industrial standards. Moreover, the incentive levels were uniformly adjusted from the previous A4 or B grade to B grade, reflecting the difficulty in increasing new steel capacity. Therefore, although some anti-dumping investigations have been initiated, the status as a net importer may be hard to change in the short term...