What does "no direct connection available" mean?

In Space Engineers it always says no direct connection available when playing peer-to-peer. This always happens when I connect to friends via the peer-to-peer function in the game (multiplayer) and it happens to my friends as well.

I've searched as much as I can for a solution but can only find other users with the same problem. There's a lot of lag when playing like this for the person that connects as a client. The host has no lag.

• What does it mean?
• How do I fix it?

Space Engineers uses the Steam Network for multiplayer with friends. Therefore, you need to open the ports outlined in this support article:

Steam Client

• UDP 27000 to 27015 inclusive (Game client traffic)
• UDP 27015 to 27030 inclusive (Typically Matchmaking and HLTV)
• TCP 27014 to 27050 inclusive (Steam downloads)
• UDP 27031 and 27036 (incoming, for In-Home Streaming)
• TCP 27036 and 27037 (incoming, for In-Home Streaming)
• UDP 4380

Steamworks P2P Networking and Steam Voice Chat

• UDP 3478 (Outbound)
• UDP 4379 (Outbound)
• UDP 4380 (Outbound)

Have a look at PortForward to find out how to port forward on your router or consult the manual.

Reviving this old question since I've came across the same issue.

I would like to extend accepted answer for those who are playing within the same local network (behind a single router). In that case you'll need to set different port on each client in order to be able to play without issues.

1. Go to Steam's My games menu
2. Right-click on the game you wish to play
3. Go to Properties From the General tab, click on the Set launch options button

4. Add a different client port number on each machine between 27005 and 27032 in the following format: +clientport 270XX

5. Click OK

   Note: Do not use port 27020 (Steam suggest it)

More details here: https://support.steampowered.com/kb_article.php?ref=6370-QPHJ-3567