The True Confidence vessel, traveling from Tianjin to Jeddah, was loaded with over 42,000 tons of steel, marking the first attack by the Houthis on China's steel exports and the first deadly attack in the Red Sea, resulting in the loss of three crew members.
Despite weak domestic demand, China's steel exports are increasing. In 2023, rolled steel exports rose by 36.2% to 90.26 million tons. The Middle East has become a significant market for Chinese steel, with the region's largest importer seeing a 53% increase in supply to 10.9 million tons last year. Chinese steel exports to Saudi Arabia also rose by 30% to reach approximately 3 million tons.
The cost of shipping containers from China to the Mediterranean has quadrupled since November. The attack is expected to further increase freight and insurance costs, posing new challenges for Chinese suppliers. However, Chinese traders are still planning to continue steel shipments via the Red Sea, driven by strong steel demand in the Middle East despite rising costs.
The long-term effects of the attack remain uncertain. Increased regional tensions and further maritime security disruptions could impact steel supply chains and shipping routes.
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