Middle East Steel Market Faces Strain Amid Logistics and Supply Challenges

Middle East Steel Market Strain and Supply Disruptions

The Middle East steel market faces unprecedented strain due to logistical disruptions and regional conflict. AGSI, a leading AGSI steelmaker, reports that even the Covid crisis was less challenging than current market conditions. Shipping through the Strait of Hormuz remains high risk, severely affecting imports from Asia to the UAE, Qatar, Kuwait, and Saudi Arabia.

Rising freight costs compound supply challenges. Container prices from India surged from $300 to $3,500 per container, while Chinese shipments jumped from $800–900 to $6,500–7,000. Vessel frequency dropped significantly, reducing steel billet availability. Alternative ports like Sohar and Fujairah face capacity limits, keeping steel shipments constrained.

Limited billet supply pressures rebar production. UAE mills, including Emirates Steel, raised rebar prices due to soaring input costs. Domestic rebar offers increased by 200–215 dirhams per tonne, while imports from Oman jumped to $724–730 per tonne CPT. Supply uncertainties may lower April consumption to 450,000 tonnes, down from 525,000 in March.

AGSI Expansion Plans Amid Regional Challenges

Despite the market strain, AGSI maintains expansion plans. The HRM3 rolling mill, with 600,000 tonnes per year capacity, is expected operational in April. Upgrades to the HRM1 mill will double capacity to 800,000 tpy, targeting a total rebar output of 1.64 million tpy once complete.

Operational risks remain. Mills may operate at 50% capacity in May due to high costs and limited billet availability. AGSI has paused one mill temporarily, with plans to suspend others if supply constraints persist. The company continues to source 100% recycled scrap locally for net-zero steel production, underscoring its strategic resilience amid market uncertainty.

SuperMetalPrice Commentary:

The Middle East steel market highlights the fragility of global supply chains under geopolitical pressures. Freight cost spikes and port disruptions create short-term pricing volatility. However, AGSI’s focus on local scrap and expansion plans positions it to navigate future supply risks. Buyers and suppliers should monitor both shipping lanes and regional tensions to anticipate market shifts in Q2.