New Delhi, March 8 The global steel industry, including India, is expected to face multiple market-related challenges in the coming days as the escalating crisis in the Middle East impacts fuel costs, which has led to increased freight rates, according to BigMint Research.
Military tensions in the region are escalating as both Iran and the US, along with Israel, continue to attack each other.
BigMint analysts said that crude oil, LNG, and freight costs are rising simultaneously, transmitting cost pressure directly into steel and steel-related commodity markets.
Crude oil prices have risen from an average of USD 70 a barrel before the war to about USD 90 per barrel, an analyst said, adding that the cost is expected to continue to rise in the coming days.
The war has also impacted freight costs, which have almost doubled in recent times. In the absence of insurance coverage, shipping operators are also offering freight at non-negotiable prices based on the availability of the vessel.
On the impact of the US-Iran conflict on steel markets, including India, they said the industry would face sustained input cost inflation across coal, scrap, and ore, with freight and energy reinforcing one another.
"The players are expected to pass on the increased cost to customers. However, if the market is not ready to absorb the cost, steel demand can also be affected," an expert said.
Prolonged disruption could push the prices of coking coal – a key steel-making raw material – from major supplying markets such as Australia, Russia, and the US.
Increased input costs, coupled with higher freight costs, will also put pressure on margins, the analysts added.
