Iron ore futures rose above CNY 790 per ton, approaching a two-month high, as escalating conflict in the Middle East began to disrupt shipments of the key steelmaking raw material. According to ship-tracking analytics, at least three cargoes of iron ore mined by the UK’s Anglo American Plc and two from Brazil’s Vale SA have had their destinations altered.
Steel producers in the Middle East are heavily dependent on imports of high-grade iron ore for pellets used in direct reduced iron (DRI) production, a vital intermediate step in steelmaking. Oman and Bahrain are the region’s primary pellet producers. The diverted shipments have been rerouted to East Asian markets, including China, Malaysia, and Vietnam.
Shipping through the Strait of Hormuz is effectively at a standstill amid Iranian attacks on vessels. The narrow passage is also a critical corridor for China’s steel exports to the Gulf, which has emerged as China’s second-largest export market.
