Middle East crisis hits steel

The ongoing crisis in the Middle East, marked by heightened military tensions among Iran, the US, and Israel, is set to significantly disrupt the global steel industry, including India's market. According to BigMint Research, escalating fuel costs are driving up freight rates, which are projected to rise nearly 40% as a direct consequence of the conflict. Crude oil prices have surged from an average of $70 to around $90 per barrel, putting additional pressure on the steel sector. Analysts warn that this situation is likely to lead to sustained inflation in input costs for steel production, affecting the prices of essential materials such as coking coal, scrap, and ore. With no insurance coverage available for marine operators, freight costs are becoming non-negotiable, further straining the industry. As producers grapple with these rising costs, they may be compelled to pass them on to consumers. However, if the market cannot absorb these increases, there could be a significant decline in steel demand. This mounting cost pressure not only threatens profit margins but could also lead to extended disruptions in supply chains, particularly from major exporting countries like Australia, Russia, and the US.