According to recent market analysis, the US-Iran conflict that broke out in early 2026 has a complex "double-edged sword" impact on China's steel exports: in the short term, it directly causes logistics disruptions, rising costs, and declining orders; but in the medium to long term, by driving up overseas energy costs and squeezing supply from other countries, it may create structural substitution opportunities for China's steel exports.

Short-Term Pain: Supply Chain Disruptions and Surging Costs

The negative impact of the escalating conflict is rapid and direct, mainly in three aspects. First, logistics channels are blocked: the core issue is the threat to shipping safety in the Strait of Hormuz, a key global artery for energy and goods. This directly affects China's steel shipments to the seven Persian Gulf countries (Saudi Arabia, UAE, etc.). Scale of impact: In 2025, China exported over 13 million tons of steel to these seven countries, accounting for more than 11% of total annual exports. Direct consequences: Newly received orders in March faced widespread delays or defaults, and some buyers suspended inquiries due to uncertainty over landed costs.

Second, transportation and raw material costs have soared: increased route risks and rising oil prices have directly pushed up sea freight rates and the landed cost of raw materials such as iron ore. Some reports indicate that freight rates on certain routes jumped as much as 30% in a single day. This is a heavy blow to the already thin profit margins of steel export trade.

Finally, the combination of these factors led to an 8.1% year-on-year decline in China's steel exports in January–February 2026, marking a clear drop from the historic highs of the previous year.

Medium-to-Long-Term Opportunity: Energy Cost Advantage May Become the Decisive Factor

Despite the significant short-term negative impacts, market analysts generally believe that if the conflict persists, it could open new space for China's steel exports.

On one hand, major steel-producing regions such as Europe, Japan, South Korea, and Southeast Asia are highly dependent on imported energy. Higher natural gas and oil prices caused by the conflict will sharply raise steelmaking costs in these regions, leading to mill losses and production cuts. On the other hand, China has a more stable energy supply system and relatively lower electricity costs. When global energy costs rise, the cost competitiveness of Chinese steelmakers actually strengthens.

Model estimates show that if global energy prices rise by an average of 20%–40% due to the conflict, overseas quarterly production could fall by 3.4 million to 6.8 million tons. If China fills this gap, theoretically it could increase China's quarterly steel exports by 11%–23% year-on-year.

Iran is a major steel producer and billet exporter in the Middle East, with an annual output of about 32 million tons. The conflict has cut off its raw material imports and finished product exports, causing its supply to nearly stall. This creates opportunities for Chinese steel billets and other products to fill the gap left by Iran in traditional markets such as Southeast Asia.

There are alternative logistics routes: although the Strait is blocked, solutions exist. Saudi Arabia can receive goods via Red Sea ports, while the UAE has ports on the Gulf of Oman outside the Strait, with rail transshipment available. These alternatives can cushion the long-term impact of logistics disruptions.

In summary, under the 2026 US-Iran conflict, China's steel exports stand at a crossroads between "short-term pain" and "long-term transformation." In the short term, shipping risks, cost pressures, and order losses are harsh realities that must be faced. In the medium to long term, if the conflict persistently drives up global energy costs, China, with its cost advantage and stable supply chain, stands to gain additional overseas market share, partially offsetting losses from trade barriers. The ultimate impact depends on the duration of the conflict, the trajectory of global energy prices, and the enforcement intensity of anti-dumping policies in various countries.