The global steel sector is striving to understand the short- and long-term consequences of the current conflict in the Middle East, which escalated over the weekend, Kallanish notes.
Of particular concern is that the Strait of Hormuz is currently virtually impassable, leading to volatile energy prices and potentially higher steel production costs.
"The Strait of Hormuz is the most important hub in the global energy trade, and it is currently in the zone of active hostilities. Even without an official blockade, the commercial consequences are already evident: insurers are canceling insurance coverage, transportation premiums are rising sharply, and ships are changing routes or suspending transit. The side effects go far beyond energy," ING said in a note.
"The war in Iran is affecting the global trading system, which has already been under pressure from Trump's tariff offensive and the ongoing fragmentation of supply chains following Covid and the war in Ukraine," he adds.
Jefferies analysts believe that the closure of the Strait of Hormuz will directly affect the iron ore market, as Iran accounts for about 3% of global iron ore production and 1.5% of iron ore shipments by sea.
"The war will have an indirect impact on other commodities as a result growth and tightening of the cost curve due to higher energy prices and supply chain risks," they note.
Traders say that there is very little up-to-date information about the state of steel mills and ports in Iran due to the lack of an Internet connection. They expect that there will probably be power outages in the country.
"Steel consumers mainly in Southeast Asia and ASEAN countries are waiting for Iranian steel," says one trader. "The conflict will lead to a decrease in the rate of loading and unloading, as well as a decrease in cargo flows on ships."
Exports of finished steel and semi-finished products from Iran reached 10.32 million tons in the first ten months of the current Iranian calendar year. Shipments of iron ore concentrate and pellets totaled 20.7 million tons.
According to Navigate Commodities, the main destinations are Turkey, Armenia and Pakistan, which account for 331,705 tons, 252,632 tons and 223,401 tons, respectively.
Market participants in the United Arab Emirates and Saudi Arabia, meanwhile, note that if the import of raw materials and blanks by sea is carried out through the ports of Oman, and then by road, this will increase the cost of steel production and conversion in the region.
As expected, oil and gas prices opened higher on Monday. ING's commodity analysts predicted,
