US President Donald Trump’s announcement Tuesday that the US government will institute “the highest level of economic sanction” against Iran as the US walks away from the 2015 Iran nuclear deal is more likely to slow Iran’s steel capacity expansion program than to curb its steel and iron ore exports. Iran since 2015 has pushed forward with a national steel industry development program that envisages a near-doubling of capacity to 55 million mt by 2025, from a current nominal capacity of 32 million mt/year. European plantmakers including SMS, Danieli, Sarralle, Outotec and voestalpine have boosted their involvement in new and expanding Iranian steel production projects since the the Joint Comprehensive Plan of Action (JPCOA) accord became effective early 2016. New mill projects or those underway are now expected to be seriously hit by financing difficulties stemming from a renewal of US sanctions. The sources said many had already ground to a halt amid uncertainties over US policy. Financing has always been challenging for these projects in which only banks with no US connections have been able to participate. The Iranians are expected to turn increasingly to Chinese technology for their steel and metals development projects if they become unable to work with the Europeans. Iran has become a significant steel exporter in recent years as its domestic market growth has been insufficient to absorb its steel output growth. Total exports of steel and direct reduced iron, a steelmaking raw material, exceeded a record 9 million mt in the Iranian year ended March 20, 2018, the Iranian Steel Producers Association (ISPA) reported this week. Within this total, exports of semi-finished steel products such as billets and slabs accounted for 6.87 million mt, a jump of 84% on the previous year. Iran intends to increase its total steel and DRI exports to 12 million-13 million mt in the current Iranian year, ending March 20, 2019, ISPA said. Crude steel output is planned to increase to 26 million mt this year from 21 million mt last year. Iran does not export steel to the US. Its steel exports are destined mainly for Asian countries including Thailand, Taiwan, Indonesia and Philippines, as well as Middle East nations including Oman and European nations including Spain and Italy. Iranian exporters do not typically use letters of credit and their steel export trade, developed via traders without US links, is therefore not expected to be greatly impacted by the renewal of US sanctions, trading sources said. Iranian steel exports are considered competitive due to the devaluation of the Iranian rial, which has lost around 50% of its value over the past year. Iran’s exports of iron ore have dwindled in recent years due to the need to keep more at home to feed the nation’s growing steel production. Iran exported some 18 million mt of iron ore in the year ending March 20, down from a peak of 25 million mt/year several years ago. As virtually all Iran’s iron ore exports are destined for China, this trade is not expected to suffer any immediate impact from US sanctions. Source: Platts
A renewal of US economic sanctions against Iran is more likely to curb the country 's global capacity expansion scheme than curb its exports . Since 2015 , Iran has pushed a steel sector development agenda that envisages a near - doubling of capacity by 2025 . Mill projects due to be completed – or already being constructed – are now expected to be seriously affected by environmental issues . But its steel exports are headed mainly for Asia , the Middle East and Europe , and its deals are developed via agreements without US links , although they are less likely to be impacted by sanctions .