Stainless steel market hit by rising energy and shipping costs

Rising energy prices and shipping disruptions are placing renewed pressure on the global stainless steel market, according to analysis by MEPS International.

In its latest Stainless Steel Review, MEPS reports that market participants already dealing with tariff-related trade disruptions in 2025 are now facing a further supply shock linked to the escalation of the Middle East conflict.

Higher freight rates and longer delivery times are expected to reduce the competitiveness of imports in both Europe and the United States, adding to existing cost pressures from mechanisms such as CBAM and Section 232 tariffs.

The disruption follows Iran’s closure of the Strait of Hormuz after the US-Israeli offensive on February 28, a route that carries around 20% of global oil and gas shipments. In response, several Asian producers, including Posco and Jindal Stainless, paused export offers amid rising uncertainty, insurance costs and logistical risks.

Shipping costs have increased significantly as vessels are diverted around the Cape of Good Hope, extending transit times by up to two weeks. According to MEPS, container freight rates on the Shanghai–Rotterdam route rose sharply in March, reflecting tightening capacity and higher risk premiums.

Energy markets have reacted even more strongly. MEPS highlights that Asian stainless producers are particularly exposed due to their reliance on LNG. Supply disruptions, including halted production in Qatar and damage to Iranian infrastructure, are tightening availability and pushing up costs. Indian producers have already reported production cuts linked to gas shortages.

In Europe, stainless producers are also feeling the impact. Benchmark TTF gas prices more than doubled in March before easing slightly, increasing cost pressure across the value chain. MEPS notes that domestic mills are considering energy surcharges, which could drive further price increases.

At the same time, the broader economic outlook remains uncertain. Rising energy costs are expected to feed into inflation, potentially weighing on stainless steel demand. The European Central Bank has already revised its inflation outlook upwards while lowering its GDP growth forecast.

MEPS concludes that while the immediate effect is upward pressure on stainless steel prices, the sustainability of these increases will depend on demand, which remains fragile in key European markets.

Source: MEPS, Photo: Fotolia