Attacks in the Red Sea are hindering the restoration of safe sea routes

The sinking of two cargo ships in the Red Sea put an end to steel importers' earlier hopes that the busy shipping route would return to normal and reduce steel transportation costs this summer.

Houthi rebels attacked the Magic Seas cargo ship operated by Greece on July 6 after the second ship, the Eternity S, sank on July 9. These were the first cargo ships sunk en route to the Suez Canal in 2025.

The new attacks came less than a month after the French shipping line CMA CGM became the first shipping company to pass through the Suez Canal since March 2024. According to Lloyd's List, traffic volumes across the Red Sea remain 60% lower than before the Houthi rebels launched attacks on cargo ships.

The Yemen-based Houthis said this month's violence was in response to alleged violations by shipping companies of their ban on entering Israeli ports. ports.

On July 10, the day after the Eternity C shipwreck, respondents from the European Parliament stated that the cost of transportation from China to Turkey increased by 43% compared to the previous week.

However, the ongoing conflict in the Red Sea is not expected to have a significant impact on shipping costs. it will affect shipping between Asia and the EU. Most exporters will continue to use the longer route around the South African Cape of Good Hope.

Transportation problems are compounding tariff problems in Asia

The attacks also did not stop the price drop, which was recently reported by the World Container Shipping Index (WCI). In the week to July 17, the price of WCI dropped 2.6% from the previous week, to $2,602 per 40-foot container, marking the fifth consecutive weekly decline. This was due to a sharp jump in shipping prices caused by an acceleration in exports ahead of President Trump's July 9 deadline for negotiations on "reciprocal" import tariffs from the United States.

The volatility of shipping prices is an additional obstacle for Asian steel exporters, who are already feeling the effects of import tariffs from the United States. On June 4, steel import duties under section 232 were doubled to 50%. In addition, the results of negotiations on "mutual" import tariffs will also affect many processed products. The deadline for these negotiations is August 1, and China's negotiations with the United States are scheduled to end on August 12.

• This article was first published in the journal of MEPs International Steel Review. The monthly report provides subscribers with information on steel prices, indexes, market commentary, and forecasts from key global steel markets. Contact the MEPs for