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If the Strait of Hormuz reopens, Saudi scrap steel prices are expected to fall.

Category: Blog

Time:2026-06-18

If the Strait of Hormuz reopens, Saudi scrap steel prices are expected to decline. As of the week ending June 16, domestic scrap steel prices in Saudi Arabia were projected to fall following the agreement on a framework for reopening the Strait of Hormuz. The deal between the U.S. and Iran is anticipated to result in the full, toll‑free reopening of the strait. Although vessels have not yet passed through the strait, oil prices have dropped sharply this week. Since the outbreak of the conflict, Saudi rebar prices have risen significantly due to higher transportation and energy costs; while scrap steel prices have also increased, they have lagged behind rebar, thereby widening steelmakers’ profit margins. This week, rebar prices fell on a week‑over‑week basis, as weaker demand—driven by lower purchasing volumes and rising distributor inventories—weighed on the market. Market expectations point to further declines in rebar prices once the strait reopens.

If the Strait of Hormuz reopens, Saudi scrap steel prices are expected to fall.

As of the week ending June 16, domestic scrap steel prices in Saudi Arabia are expected to decline following the agreement to reopen the Strait of Hormuz under a framework deal. The accord between the U.S., Israel, and Iran is anticipated to result in the full reopening of the strait with zero tolls. While vessels have yet to transit the strait, oil prices have fallen sharply this week. Since the onset of the conflict, Saudi rebar prices have risen substantially due to higher transportation and energy costs; although scrap steel prices have also increased, their rise has lagged behind that of rebar, thereby widening steelmakers’ profit margins. This week, rebar prices declined on a weekly basis, as weaker demand—driven by reduced purchasing volumes and rising distributor inventories—weighed on the market. Market expectations point to further declines in rebar prices once the strait reopens.

　　Despite a decline in rebar prices, the Saudi scrap index has risen again, reflecting that the price hike implemented on June 9 in the Eastern Province has now been in effect for a full week. This week, the domestic composite delivery price index for HMS 1&2 stood at 1,759 riyals per ton, up 51.17 riyals per ton from June 9, marking yet another record high. Market participants note that, even amid limited supplies of primary raw materials such as direct reduced iron and persistently tight supply conditions, the most likely next move for scrap prices is downward. A steel mill source indicated that scrap prices remain unchanged for now, but rising circulation volumes suggest suppliers anticipate a price drop in the coming days. Sentiment following the reopening of the Strait is also expected to weigh on scrap prices. A major steelmaker in the Eastern Province purchased HMS 1&2 at 1,860 riyals per ton, while another secured it at 1,810 riyals per ton. In Jeddah, the standard‑length HMS 1&2 delivered price hovered around 1,700 riyals per ton. In Riyadh, 0.6‑meter cut HMS 1&2 was quoted at 1,775 riyals per ton, though buyers were reluctant to pay above 1,720–1,750 riyals per ton. Market expectations point to a pullback in prices next week. The premium for cut material over standard‑length material ranges from 40 to 70 riyals per ton.

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If the Strait of Hormuz reopens, Saudi scrap steel prices are expected to fall.

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