Posted on 03 Apr 2026
Ongoing turmoil in the Middle East is creating a significant steel billet supply gap and driving up regional shipping and logistics risks, pushing import costs for Southeast Asia higher by more than 20%, according to Mysteel's latest analysis report.
Iran has long been a key supplier of semi-finished steel to Southeast Asia, which relies heavily on imported billets to support electric-arc-furnace (EAF) production. Public information showed that Iran exported approximately 5.4 million tonnes of billets and slabs in 2025, making up roughly 50% of the country's total steel exports. Southeast Asian countries have historically absorbed over 30% of these steel exports.
In late March, the United States and Israel conducted airstrikes targeting two of Iran's most important steel plants -- Mobarakeh Steel Company (MSC) in Isfahan and Khuzestan Steel Company (KSC) -- and damaged a power plant supporting MSC. These attacks forced both mills to suspend production, significantly disrupting the region's supply chain, as Mysteel Global reported.
As such, Mysteel estimates Iran's semi-finished steel exports may temporarily decline by 40-50%, resulting in a shortfall of roughly 2-2.5 million tonnes. For Southeast Asia, this translates to an estimated replacement demand of 0.8-1.2 million tonnes of billets.
The disruption is seen reshaping regional steel supply chains and trade patterns. Countries in Southeast Asia, including major buyers such as Thailand, Indonesia, and Malaysia, are turning to China and India to fill the gap.
During the first two months of 2026, China exported 1.77 million tonnes of billets, a 16% increase compared with the same period last year. Indonesia, the Philippines, and Thailand were the largest buyers. Mysteel learned that some Chinese mills have their April orders fully booked, and production is now scheduled to continue through June.
Meanwhile, shipping and logistics challenges have compounded overall delivery costs of billets. With the closure of the Strait of Hormuz and higher oil prices, fuel surcharges have been applied to many routes. Ships are also taking longer, riskier detours, extending voyages by 10-14 days. As a result, freight rates from China and India to Southeast Asia have risen roughly 15-20%.
War insurance premiums for billet shipments through the Persian Gulf have surged from normal levels of around 0.25% to 5-10%, adding $10-15/tonne to delivery costs. In addition, buyers and traders are factoring in a 5-8% risk premium to account for potential delivery delays or cancellations. These combined factors have raised the export price of Chinese billets to Southeast Asia by 18-22%, pushing CFR prices to $480-500/t, Mysteel learned from market sources.
The disruptions have also affected billet delivery timelines. Market sources said that some Indonesian EAF mills have had to cancel and renegotiate orders from China, resulting in longer lead times and higher contract prices. The combination of higher costs and less predictable supply is expected to put short-term upward pressure on finished steel prices in the region, further feeding inflationary pressures.
In the near term, Southeast Asian billet imports are likely to remain concentrated on China and India while prices stay elevated. Longer-term trends will depend on the pace at which Iran's export capacity recovers and shipping risks in the Persian Gulf stabilize. Until then, China's influence on regional billet pricing is expected to remain strong, and trade flows will continue to adjust in response to both supply and logistical risks, Mysteel's report suggests.
Source:Mysteel Global
