Avoid the Middle East! At least 5 iron ore bulk carriers have changed course en route, heading towards Asia

The Middle East conflict continues to escalate, rapidly disrupting the maritime trade pattern of iron ore. According to CCTV News, local time on the 12th, officials at a southern Iraqi port reported that two foreign oil tankers were attacked and caught fire within Iraqi territorial waters. This resulted in at least one death and 38 crew members being rescued, prompting Iraq to suspend operations at its oil ports.

According to Xinhua News Agency, the UK Maritime Trade Operations Office stated on the 12th that a cargo ship was hit by an unidentified projectile near the Strait of Hormuz, causing the attacked vessel to catch fire. As a result, traffic through the Strait of Hormuz has nearly come to a standstill, with several iron ore-laden cargo ships urgently changing their destinations to the East Asian market, leading to a rise in iron ore futures prices.

According to tracking data from shipping data analysis company Kpler, at least five iron ore vessels have changed course—three of which belong to British mining giant Anglo American, and two belong to Brazilian miner Vale. These ships, originally bound for Bahrain and Oman, have now redirected to countries such as Vietnam, Singapore, and Malaysia.

This adjustment in shipping routes has had a particularly significant impact on the iron ore concentrate and pellet market. The Middle East is a crucial production base for direct reduced iron (DRI) globally, heavily reliant on imports of high-quality iron ore pellets. Kpler analyst Alexis Ellender stated, "The Middle East war has significantly tightened the supply of iron ore pellets." The benchmark iron ore futures price in Singapore rose by more than 1.3% at one point, reaching USD 105.55 per ton, the highest since mid-January.

Ships Forced to Change Course, Bahrain and Oman Hit Hardest

Kpler data shows that the Cape Shangrila, owned by Anglo American, was originally destined for Bahrain but has now redirected to Singapore; the Cape Jasmine, also originally bound for Bahrain, has changed course to Vietnam; and the Mineral Zimbabwe has shifted from Oman to Asia and other countries. Two vessels owned by Vale that were originally headed for Oman have also redirected to Malaysia and other countries. Additionally, according to Kpler data, other ships have been forced to remain outside the Arabian Gulf and have not continued their voyages.

The Strait of Hormuz is one of the most important shipping routes in the world. Following the U.S. and Israel's strikes against Iran, Iran immediately launched attacks on passing vessels, leading to near-total disruption of maritime traffic in the strait. Meanwhile, the war has driven up freight and fuel costs, further increasing the prices of goods arriving at ports.

Bahrain and Oman are key centers for pellet production and export in the Middle East. Bahrain is both an importer and exporter of pellet materials, while Oman has a larger-scale pellet export capacity, with Vale operating a dedicated facility at its Sohar port Macquarie Group estimates that the total DRI production of Gulf countries will be approximately 14 million tons in 2025.

David Cachot, Research Director at Wood Mackenzie, warned that "the current geopolitical turmoil exposes the obvious vulnerabilities of this already highly concentrated supply chain." He stated that once the flow of pellets or the export of pellet ore is disrupted, the impact will "quickly spread to" the entire DRI industry