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Madannname News Agency (madanname.ir): The global steel market in the last two months of 2026 still remains under the shadow of a series of geopolitical and economic factors; ranging from the continuation of the Iran war and the Strait of Hormuz restrictions to the weakness in China’s housing sector and increased iron ore supply in the global market. Experts believe that until the current conditions of the Strait of Hormuz and West Asia become clear, it is not possible to outline a stable outlook for the regional steel market since disruptions in maritime transport routes have not only affected the energy market but also impacted the raw materials and metals trade chain from scrap iron to aluminum and steel.
Closure or traffic restrictions in the Strait of Hormuz have increased shipping and trade costs, and have even disrupted some consignments related to the trade of scrap iron and metal goods of the Persian Gulf countries. In the iron ore market, conditions are not favorable for a significant price increase. Supply surpasses demand, and the gradual production rise at the Simandou mine in Guinea, alongside high supplies from Australia and Brazil, has imposed new pressure on the market.
The increase in iron ore inventories at Chinese ports also reinforces this pressure. Another important point is the shift in steel demand patterns in China. Chinese steel demand is gradually moving from the construction sector toward manufacturing industries. The share of construction in steel consumption decreased from 58% in 2020 to 49% in 2025, while manufacturing’s share increased from 42% to 51% during the same period. This structural change has transformed investment orientations in steelmaking equipment, with greater attention to product quality, rolling capabilities, and environmental performance.
Given these conditions, experts believe that in the next two to three months prices will likely fluctuate within the current range with limited volatility, and after the Chinese New Year holidays, supply and demand conditions must be reassessed. From this perspective, the global steel and raw materials markets on the verge of 2027 are primarily awaiting a reduction in geopolitical uncertainties and a return to demand balance.
War; the Main Cause of Market Uncertainty
Keyvan Jafari Tehrani, senior expert in global steel markets, referring to the market outlook in the last two months of the calendar year, stated: Several tensions have formed in the market, and the continuation of the Iran war remains one of the influential factors affecting the market. Restrictions in the Strait of Hormuz have inherently increased costs, and their effects can be observed in the oil, petroleum derivatives, and metals trade chains.
He added: Some Persian Gulf countries in the steel chain are both buyers and sellers, and exporters of scrap iron. During this period, we even witnessed disruptions in some scrap iron export shipments from the UAE to Pakistan as well as certain containers in transit within the region.
Jafari Tehrani continued: The effects of these conditions are not limited to steel; the aluminum supply chain has also been heavily affected because the UAE and Bahrain are among the major aluminum producers in the region. This situation has impacted both production and exports in regional countries as well as their imports.
Clear Outlook Depends on the End of War
The senior global steel market expert emphasized: Until the war situation is clarified, it is impossible to envision a fully clear horizon for West Asia and the Middle East, including Iran.
Jafari Tehrani added: Discussions are ongoing regarding the Iran war and the Ukraine war, and if these conflicts move toward resolution by the end of 2026, the steel market could distance itself from current instability in terms of supply and demand and enter a clearer space.
China Still Trapped in Housing Recession
The senior expert also referred to the condition in China, saying: China, as the largest steel producer and consumer in the world, still has an unfavorable situation in its housing economy. Steel consumption in the construction sector is decreasing, while a larger portion of steel consumption is moving toward industrial activities.
He added: This trend is not expected to change significantly in the short term. The Chinese New Year holidays occur in late January or early February, with about three months remaining until then. Therefore, the relative weakness in construction could affect not only the last two months of the year but also a significant part of January, impacting China’s steel consumption market.
Iron Ore in Saturation State
Jafari Tehrani, referring to the iron ore market situation, said: The market currently faces an oversupply, and the volume of supply exceeds demand. He added: When the Simandou mine in Guinea started production in late last calendar year, initial estimates discussed about a 20 million ton impact on the market, but the production increase trend has shown that the project’s effect could be much greater. Simandou’s production capacity could later reach about 150 million tons annually, and its gradual production growth is one of the main supply side factors.
Australian and Brazilian Pressure on the Market
The senior global steel market expert continued: Alongside Simandou’s production growth, iron ore supplies from Australia and Brazil persist, and this combination has increased supply pressure on the market.
He stated: On the other hand, rising iron ore inventory levels at Chinese ports is another factor exerting downward pressure on prices. When supply is high and demand cannot grow as quickly, there is no basis for a significant price increase.
Three Months of Low Volatility for Iron Ore
Regarding the short-term outlook for iron ore prices, the senior expert said: It seems this situation will continue at least until the Chinese New Year holidays; thus, positive price trends are not expected in the next two to three months.
Jafari Tehrani added: Iron ore prices will probably move within the current range with limited fluctuations. After the Chinese New Year holidays, production conditions, port inventories, steel demand, and China’s economic situation should be reexamined for a more accurate assessment of the market’s future trajectory.
Three Scenarios for the Steel Market in the Coming Months
In an optimistic scenario, a continuous reduction in Chinese iron ore and hot-rolled coil inventories, increased molten pig iron production, and growth in confirmed orders in Europe and India could strengthen prices of raw materials and steel products. Rising prices of coking coal and other production inputs would also raise replacement costs for inventory. However, if price increases do not translate into actual transactions or factories decrease their capacity utilization rates, the upward trend could face limitations. In a pessimistic scenario, renewed growth in Chinese iron ore port inventories from the reported 147.75 million tons, reduced export orders, and intensified price competition among producers could pressure billet and rebar prices. In such conditions, producers with higher energy and financing costs would be more exposed to margin contractions. However, production declines, raw material supply constraints, or sustained improvements in final consumption could alleviate the pressure. In a baseline scenario, markets are expected to perform unevenly, and differences in supply, demand, energy costs, and countries’ trade policies will determine price trajectories regionally.
Global Demand Growth; No Guarantee of Coordinated Price Increase
The World Steel Association has forecast a 1.7% increase in global steel demand in 2027. However, growing demand does not necessarily mean simultaneous price increases in all markets. Differences in production capacity, trade policies, energy costs, and inventory levels can lead some regions to experience price growth while others face stagnation or downward pressure.
Therefore, assessing the steel market requires simultaneous analysis of price trends and actual demand evidence. An increase in asking prices without resulting in confirmed transactions and purchase volume growth alone does not signal a market trend change.
Cost of Goods Sold and Liquidity; Key Criteria for Business Decisions
In such conditions, managing liquidity and replacement costs becomes more important than relying on nominal price differences. Traders must differentiate between asking prices, confirmed deals, spot market indexes, and futures contract settlement prices. Comparing FOB, CFR, and EXW prices without accounting for freight, insurance, clearance, financing, and currency conversion costs can lead to incorrect profit estimations. Differences in grade, dimensions, thickness, technical standards, and origin of production also affect resale prices and acceptance in destination markets, so price differentials between two markets only translate to commercial opportunities if, after all costs, acceptable net margins remain.
For Iranian exporters, these considerations combine with risks of currency fluctuations, money transfer restrictions, sanctions requirements, and customs regulations of destination countries. Thus, a deal that initially appears profitable may fail to yield expected returns due to collection delays or resale difficulties.
Phased purchasing, obtaining technical specification approvals, setting payment terms before financial commitments, and aligning purchase timing with confirmed customer orders are measures that can reduce inventory holding risks and pressure on working capital.