In late August, according to Mysteel reports, Mauritania’s state-owned mining company SNIM and Saudi Arabia’s steel company Hadeed announced plans to establish a joint venture to develop an iron ore mine in Mauritania, targeting an annual output of 12–14 mln mt. As part of SNIM’s seven-year strategic plan, the company aims to reach an output of 45 mln mt by 2031, further consolidating its position as a leading player in both the national and regional mining industry. This adds another dynamic to dry freight prospects in the West Africa region by the end of this decade, atop of the highly anticipated, soon-to-commence Simandou, Guinean project.
In 2024, Mauritania’s iron ore exports reached 13.6 mln tons, with more than 60% shipped to China. Due to the relatively long voyage, similar to Guinea, the market favors Capesize as the main vessel type, with 82.2% of iron ore exports in 2024 carried by Capes.
Meanwhile, this is equally significant for Saudi Arabia and the entire GCC (Gulf Cooperation Council) members’ grand vision for future steel demand. For Saudi Arabia, under its “Vision 2030”, the country aims to undertake a major economic transformation, centering on reshaping its industrial base to reduce its dependence on oil, with the steel industry as a cornerstone of this strategy. Other GCC countries have similar plans, positioning the region as a strong contender for future steel capacity growth, especially in the green steel arena.
The Gulf’s new joint ventures mark a shift from oil dependence to industrial diversification. Sovereign funds, led by the Saudi PIF, are investing heavily to secure raw materials, technologies, and partnerships worldwide. Key moves include Baosteel’s tie-up with Saudi Aramco on the world’s first green heavy plate mill, Vale’s beneficiation hub in Oman, and the Mauritanian project. With cheap gas and hydrogen, the region is building a full supply chain—from ore imports to high-end steelmaking—positioning itself as a future supplier of low-carbon steel to global markets.
According to the World Steel Association (WSA) data, steel capacity expansion in the GCC countries is not explosive but rather a steady and gradual process. The previous round of production increases was mainly concentrated in 2020–22, when the combined annual compound growth rate of the UAE, Saudi Arabia, and Qatar reached 8.8%, primarily driven by large projects such as the Dubai Expo and Qatar’s football World Cup. Since then, steel production in these countries has remained stable. Due to a significant time-lag between massive strategic investments and the eventual release of production, steel output is expected to further increase in 2027 and beyond, following the commissioning of a series of major infrastructure projects, which should drive regional steel production.
Against the backdrop of rising steel production in the GCC countries, the positive news for the shipping market is that these nations have relatively limited iron ore reserves and production. Thus, to produce the steel, they rely on seaborne iron ore imports. The logic seemingly overturns the traditional “resource-oriented” industrial development model. But for these countries, the true strategic resource is not underground iron ore but their unique energy advantage. Extremely low natural gas prices allow them to operate direct-reduced iron (DRI) plants at the lowest global cost, producing high-quality sponge iron. This energy advantage offsets the logistical disadvantage of imported iron ore.
According to AXSMarine, the Gulf countries ranked just behind China, Japan, and South Korea in seaborne iron ore imports in 2024 as it imported a total of 47.2 mln mt of iron ore. Meanwhile, the region imported 13.3 mln mt of steel. Given the high frequency of trade among Gulf countries, we will exclude “cabotage” within the region in the following discussion, these cabotage volumes amounted to 14.6 mln mt of iron ore and 1.5 mln mt of steel.
Brazil was the region’s largest iron ore supplier, accounting for 71.5% (or 23.3 mln mt). This was followed by Norway and India at 3.6 and 2.1 mln mt, respectively. Since imports are primarily sourced from Brazil, 92% of shipments were transported on Capesizes. Moreover, these ships were also effectively employed to export processed iron ore. Of the 10.2 mln mt of iron ore exports from the Gulf countries, Capesizes hauled 61% (or 6.3 mln mt), with the majority shipped to China at 3.3 mln mt.
Supramaxes are the main carriers for steel imports, accounting for 72% of the market in 2024, or 8.0 mln mt. The volume of steel exports is relatively small, totaling 3.2 mln mt. Among these, Supramax bulk carriers accounted for 38% of the shipments, while the remaining volume was handled by Handysize and smaller Minibulk vessels.
Overall, with the future commissioning of Vale's beneficiation plant in Oman and Saudi Arabia's plan to establish 10 mln mt of steel production capacity, the Gulf countries will underpin future demand in the seaborne market by serving as a processing hub for iron ore and associated downstream commodities. In particular, the launch of Saudi steel mills should significantly expand the region’s future steel export capacity. Against this backdrop, Capesizes (primarily responsible for iron ore transport) and Supramaxes (mainly handling steel products) should receive a boost from this growing market.
However, this transformation path is not without challenges. Geopolitical risks remain high. Crises in the Strait of Hormuz and the Red Sea highlight the exposure of the region to trade chokepoints. Should the Strait of Hormuz be closed, iron ore and steel trade dependent on this route would be blocked, leaving domestic steel production stranded. In 2024, 60% of the Gulf countries’ iron ore imports required passage through the Strait of Hormuz. If intra-regional trade is excluded, this proportion rises to 62%.
