China’s iron ore and steel markets have shown resilience as of June 23, despite Iran’s threats to close the Strait of Hormuz. Futures prices for iron ore and steel have remained stable since June 20. Some market experts have suggested that the closure of this critical route would negatively impact China’s steel exports, both directly and indirectly.
However, the general sentiment in the market is that such a closure is unlikely. A trading source commented, “We believe the chances of closing the Strait of Hormuz are very small, but we are still closely monitoring the situation… Freight costs may inevitably rise due to higher risk surcharges and insurance premiums.” Should the Strait of Hormuz be closed, China’s steel exports to several Middle Eastern countries, including Saudi Arabia, the UAE, Iraq, Kuwait, Qatar, and Iran, would face significant repercussions.
Notably, Saudi Arabia served as the largest importer of Chinese steel in the region during the first five months of 2025, importing 2.298 million metric tons, which is up 40.1% year over year. Estimates indicate that around half of China’s steel exports to Saudi Arabia traverse the Strait, while the remainder uses the Bab el-Mandeb Strait. The potential impact of closing the Strait could lead to a loss of approximately 9.55 million metric tons annually of China’s steel exports, representing about 8% of the nation’s total.
A market participant noted that any closure would have obvious adverse effects on steel exports, exacerbating downward pressures on prices and production, thereby weakening the demand for raw materials. Despite these concerns, the iron ore and steel markets remain relatively stable at present, with domestic steel demand projected to decline further in the latter half of 2025. Additionally, factors such as increased tariffs in the US and growing tensions between Iran and Israel threaten global economic growth and overseas steel demand.
On June 23, domestic hot-rolled coil and rebar prices were observed unchanged, while the September contract for iron ore slightly increased.