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| Gulf Cooperation Council |
Market participants in the Middle East do not expect steel prices to normalise immediately. Therefore, expectations for an imminent peace deal have not yet changed the physical steel market. Freight costs and insurance premiums will probably ease gradually over the coming months. Meanwhile, buyers remain highly cautious after severe production and shipment delays during the conflict. The market needs time to process the impact of a potential US-Iran peace deal.
Reopening the Strait of Hormuz to Reshape Raw Material Inflows
A potential US-Iran peace deal will likely affect steelmaking raw materials before finished steel. Mills in the Gulf Co-operation Council (GCC) face tight availability of iron ore pellets and scrap. In contrast, Omani supplies have partially shielded the UAE market from severe shortages. Delayed iron ore cargoes from Bahrain Steel may return to the Gulf once the strait reopens. However, domestic scrap generation in Saudi Arabia will remain limited due to summer collection slowdowns.
High Transport Costs Drive Billet Demand Amid Export Quota Hurdles
Disruptions to raw material flows have drastically increased regional demand for semi-finished steel. As a result, Saudi buyers have purchased significant amounts of billet from India to replace missing metallics. These billet cargoes discharge at western Saudi ports and move by truck to the east. Meanwhile, finished steel exports from the GCC are unlikely to recover quickly. International buyers now apply a risk discount to Middle Eastern material after recent cancellations. Furthermore, strict EU safeguard quotas and carbon regulations continue to halt some Saudi export orders. A potential US-Iran peace deal cannot instantly resolve these structural export barriers.
ScrapInsight Commentary
A potential US-Iran peace deal offers long-term supply chain relief but cannot trigger an immediate market correction. Supply scarcity and elevated logistical costs will support regional steel prices until the Strait of Hormuz fully normalises. Furthermore, the slow recovery of regional scrap collection indicates that metallics will remain tight through the summer.
