Chinese steel suppliers remain committed to shipping via the Red Sea route despite a recent attack on a vessel carrying Chinese steel products to Saudi Arabia on March 6, according to local traders interviewed by S&P Global Commodity Insights on March 7, says an article published on sp global website.
Summary
- Despite a recent attack on the vessel True Confidence carrying Chinese steel to Saudi Arabia on March 6, Chinese steel suppliers are maintaining their commitment to shipping via the Red Sea route.
- The attacked vessel was transporting 42,082 metric tons of steel from Tianjin, China, to Jeddah, Saudi Arabia, marking the first targeted attack on Chinese steel exports.
- Chinese steel exports have been on the rise due to weakened domestic demand, reaching a six-year high of 90.264 million metric tons in 2023, a 36.2% increase from the previous year.
- The Middle East, particularly Saudi Arabia, has become a key market for Chinese steel exports, with imports increasing by 30% in 2023 compared to the previous year.
Targeted Attack On Chinese Steel Exports
The vessel involved in the attack, named True Confidence, was carrying 42,082 metric tons of steel from Tianjin, China, to Jeddah, Saudi Arabia. This incident marks the first targeted attack on Chinese steel exports, as reported by S&P Global Commodities at Sea data and sources.
Rising Chinese Steel Exports
Chinese steel exports have seen an upward trend due to weakened domestic demand, notably impacted by a debt-ridden property sector. In 2023, China’s finished steel exports reached a six-year high at 90.264 million metric tons, showing a significant increase of 36.2% from the previous year, according to the latest Chinese Customs data.
Middle East, Key Destination For Chinese Steel
The Middle East has emerged as a crucial market for Chinese steel exports. In 2023, the top 10 countries importing Chinese steel in the Middle East received 10.9 million metric tons, representing a 53% increase compared to the previous year, according to research firm CEIC. Saudi Arabia, in particular, saw an increase in Chinese steel imports, reaching about 3 million metric tons in 2023, up by 30% from the previous year.
Impact On Freight And Insurance Costs
Following the attack, which resulted in the first reported fatalities in the Red Sea skirmish, Chinese traders anticipate a rise in freight and insurance costs for the route. Traders have taken preemptive measures by locking down freight costs with freight companies to mitigate potential increases.
Flashpoint In A Key Shipping Route
The Red Sea route, crucial for global shipping, has remained a contentious area due to the activities of Houthi militants. Since the outbreak of the Hamas-Israel war on Oct. 7, 2023, Houthi militants have targeted ships in the region.
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Source: sp global
