What impact will the US sanctions have on the Iranian steel industry?

China imported at least 400,000 tons of Iranian steel between January and November 2019. While another important Indonesian importer bought around 200,000 tons/year of Iranian steel. Other recent buyers include Thailand, Oman, Iraq and Turkey.

New US sanctions against Iranian steel exports could have little impact. Because the prices remain attractive for Asian buyers.

„The recent US sanctions will not have a big impact on steel producers as long as steel products continue to be attractively priced,” said a trader.

Even during the previous sanctions, Asian buyers did not stop buying from Iran. Therefore, probably these new sanctions will not have a major effect, especially now, when the rial has depreciated. „

Sanctions, of course, are not totally without consequences. „It is possible that some clients are reluctant in the relationship with Iran”. Said Reyhaneh Sarlak, a specialist on the steel market.

China remains a major importer of Iranian steel

According to market sources, China may continue to import steel. Mainly through Chinese companies active in the Middle East. Chinese buyers have picked up an increasing amount of Iranian steel pig iron, ingots and sheets since June. When China banned imports of scrap metal and domestic prices rose as a result.

Amid tensions between the US and Iran, before the latest sanctions were announced, the Indonesian government had already asked local buyers to avoid Iranian steel spoons.

Also, Turkey buys from Iran. Although it is one of the largest producers of concrete steel, it is mostly supplied from the domestic supply. It imported 141,300 tonnes of steel rebar from Iran in the first 11 months of the year, up sharply from 30,700 tonnes in the same period of 2018, according to the latest data from the Turkish Statistical Institute. This happened because cheaper concrete steel offers to Turkey stimulated buying.

The main Iranian producers, with the exception of small factories in the private sector, exported 5.2 million tons of finished and semi-finished steel in the first nine months of the current Iranian year (ended December 21, 2019), up 19% year-on-year.

The steel production capacity will be 43.6 million tons/year until the end of the next Iranian year (March 20, 2021), while IMIDRO estimates production in the current financial year to reach 31.1 million tons/year, as the country continues its the ambitious Steel Capacity Expansion Program. The current steel production capacity in Iran is 35 million tons/year.

Article source: https://financialtribune.com/articles/domestic-economy/101744/impact-of-us-sanctions-on-iran-steel-iron-exports-limited