Chinese steel exporters, including steelmakers, are reassessing their Middle East sales strategies due to the recent attacks on vessels in the Red Sea by the Houthi rebel group in Yemen.
The attacks have led to concerns about increased costs, prolonged transit times, and delays in cargo shipments. Some Chinese steel mills continue to offer products to the region but at higher prices. The rise in ocean freight costs, with bulk cargo rates increasing by 10-15% and container rates doubling, has contributed to the higher offering prices for steel to the Middle East.
As of December 27, the export price for Chinese SS400 3mm hot-rolled coil (HRC) was $615/tonne CFR Dubai, departing from North China's Tianjin port. This figure represents a $15/t increase compared to the rates recorded on December 1. The reported price aligns with the most recent offer for HRC to the United Arab Emirates by a steel exporter based in East China's Zhejiang province. The exporter noted that export prices for HRC shipments to Turkey would be elevated due to shipping costs to Turkey being $5-10/t higher than those to the UAE.
This situation may lead to a short-term decrease in new steel export orders from Middle East buyers as both local buyers and Chinese steel mills adopt a wait-and-see approach. However, some Chinese exporters remain willing to do business with Middle East buyers if they can agree on prices.
In January-November 2022, China's finished steel exports to major Middle East countries, including Saudi Arabia, the UAE, and Turkey, totaled 10.15 million tonnes, accounting for approximately 12% of China's total steel exports during the same period.
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