Chinese suppliers will continue to ship steel through the Red Sea Route even though a vessel carrying Chinese steel products to Saudi Arabia came under attack and was damaged on March 6, local traders told S&P Global Commodity Insights March 7.
The attack was the first one to target Chinese steel exports, and the ship — True Confidence — was carrying 42,082 mt of steel from Tianjin, China, to Jeddah, Saudi Arabia, according to S&P Global Commodities at Sea data and sources.
Chinese steel exports have been rising due to weak domestic demand amid a debt-ridden property sector.
China’s finished steel exports hit the highest level in six years at 90.264 million mt in 2023, up 36.2%, or 23.988 million mt, from 2022, the latest Chinese Customs data showed.
The Middle East has emerged as one of the key destinations for Chinese steel exports. The top 10 countries importing Chinese steel in the Middle East shipped in 10.9 million mt of steel from China in 2023, up 53% on the year, according to the research firm CEIC.
China exported about 3 million mt of steel to Saudi Arabia in 2023, up 30% on the year, according to the CEIC data.
After the attack, which was the first one to report fatalities in the Red Sea skirmish, Chinese traders expected freight and insurance costs for the route to rise.
“I locked down freight costs with the freight company the moment I heard about the attack as I expect freight costs to rise,” a trader said.
The Red Sea route, which is a key global shipping route, has remained a flashpoint for the Houthi militants, who have been targeting ships since the Hamas-Israel war broke out on Oct. 7, 2023.
True Confidence is a Barbados-flagged vessel, and was previously owned by US-based Oaktree Capital. It is currently operated by Greek firm Third January Maritime and managed by Hong Kong’s Fleet Management, according to S&P Global Market Intelligence data, but its current owner could not be identified.
