Domestic Economy
0

Impact of US Sanctions on Iran Steel, Iron Exports Limited

China imported at least 400,000 tons of Iranian billets and slabs over Jan-Nov. One major Indonesian importer alone had been buying around 200,000 tons/year of Iranian billet. Other recent buyers of Iranian steel include Thailand, Oman, Iraq and Turkey
Impact of US Sanctions on Iran Steel, Iron Exports LimitedImpact of US Sanctions on Iran Steel, Iron Exports Limited

Fresh US sanctions against Iranian steel exports are likely to have little impact because pricing remains attractive to Asian buyers, Iran-based sources told S&P Global Platts.
“The recent US sanctions are not expected to have a big impact on Iranian steel producers, as long as steel products continue to have attractive prices,” a trader said.
“Even during the previous sanctions, Asian buyers were not put off from purchasing from Iran. So I don’t think these new sanctions will have an effect, in particular now that the rial has depreciated.”
However, some traders concede that the new sanctions may affect sentiment.
“The sanctions, of course, are not without effect; some customers may be reluctant to deal with Iran,” said Reyhaneh Sarlak, an Iran-based steel market specialist. 
She noted that these sanctions are likely to present more obstacles to trade with Iran than the previous round of secondary sanctions. 
Insurance and shipping costs may increase as a result, various traders said.
Secondary sanctions were introduced last year on some metal and mineral products.
“Domestic mills can be very competitive although some costs have increased such as freight,” the first trader said. “Locally, inflation, which is already high, can be a problem for domestic steel demand.”
Iran’s steel exports have increased during secondary sanctions against the country, according to data from Iranian mines and metals holding group IMIDRO. 
Much Iranian steel is in any case traded offshore, via traders in locations, such as Dubai. One international trader told S&P Global Platts he had heard of an Iranian steel trade involving “switching off the BLs and other documents”.
Market sources said China can be expected to continue to import some Iranian steel, mainly via Chinese companies active in the Middle East. Chinese buyers have been taking an increasing tonnage of Iranian billets, slab and pig iron since June when China banned scrap metal imports and domestic prices soared as a result. Chinese customs data show it imported at least 400,000 tons of Iranian billets and slabs over January-November.
Amid tensions between the US and Iran before the latest sanctions were announced a week ago, the Indonesian government had already asked local buyers to avoid Iranian billet. One major Indonesian importer alone had been buying 200,000 tons/year of Iranian billet. Other recent buyers of Iranian steel include Thailand, Oman and Iraq.
Turkey also buys from Iran, although as one of the largest producers of rebars, it gets most of its supply domestically. It imported 141,300 tons of rebar from Iran in the first 11 months of the year, up sharply from 30,700 tons in the same period of 2018, according to the most recent data from the Turkish Statistical Institute, as cheaper Iranian rebar offers to Turkey spurred buying interest, especially in the east of the country. In the whole of 2018, Turkey imported just 50,320 tons of rebar from Iran.
Iran’s main steel producers, excluding small private sector mills, exported 5.2 million tons of finished and semi-finished steel in the first nine months of the current Iranian year (ended Dec. 21, 2019), up 19% year-on-year. However, in the past month alone, exports totaled 485,000 tons, a 91% increase YOY, according to data from IMIDRO. 
Iran’s steel production capacity is expected to reach 43.6 million tons/year by the end of the next Iranian year (March 20, 2021), while IMIDRO estimates production in the current financial year hitting 31.1 million tons/year, as the country continues its ambitious steel capacity expansion program. Iran’s current steel production capacity is 35 million tons/year.
Mobarakeh Steel Company exported 1.1 million tons in the nine months, 47% more than the same period of the previous year, and in the last month (to Dec. 21), its exports totaled 99,000 tons, up more than sevenfold. Some 593,000 tons of slabs, a semi-finished steel product, were exported during the period by an MSC-affiliated company, Hormozgan Steel Company in the nine-month period, up 19% year-on-year.
With some 1.37 million tons of slab and billet, another semi-finished product exported during this period, Khouzestan Steel Company, Iran’s second-largest producer, reported a 17% year-on-year decrease in exports. In the last month, KSC exported 108,000 tons of semi-finished products, down 22% YOY, with the decline attributed to higher domestic sales.
South Kaveh Steel Company exported 608,000 tons of billet, 23% more than the same period of last year and last month, its exports totaled 56,000 tons, marking a 33% decrease.

Add new comment

Read our comment policy before posting your viewpoints

Financialtribune.com