US Slaps Fresh Sanctions On Iranian Steel And Metals

The US has imposed new sanctions on Iran’s steel and metals exports, Secretary of State Mike Pompeo and Treasury Secretary Steven Mnuchin said at a press conference at the White House Friday.

The move comes after President Donald Trump threatened new sanctions in response to the Iranian airstrikes earlier this week targeting US military bases in Iraq.
The sanctions on 17 entities in the steel industry and some other shipping and trading entities, including some based in the Seychelles, are designed to cut off billions of dollars to Iran.

A statement from the US’ Office of Foreign Assets Control (OFAC) lists some of the entities now to be sanctioned as Iran’s largest steelmaker Mobarakeh Steel Company, Al Mahdi Aluminum Company, Arfa Iron & Steel Company, Arfa Steel, Chadormalu Mining & Industrial Co, Esfahan Steel Company (ESCO), Golgohar Mining and Industrial Company, Hormozgan Steel Company (HOSCO), Iran Alloy Steel Company (IASCO), Iran Aluminium Company, Iranian Ghadir Iron & Steel Co (IGISCO), Iran’s Aluminum Company (IRALCO), Khalagh Tadbir Pars Co, Khorasan Steel Company, Khouzestan Oxin Steel Company, Khouzestan Steel Company, Kish South Kaveh Steel Company (SKS), National Iranian Copper Industries Company (NICICO), Pamchel Asia Steel Group Company Limited (linked to Khalagh Tadbir Pars Co), Pamchel Trading Beijing Co Ltd, Power Anchor Limited, Reputable Trading Source LLC Company (RTS LLC) and Saba Steel Company.

Rial devaluation

Aided by a devalued rial, Iranian’s steel mills and iron ore producers have continued to increase their exports of a variety of products in recent months despite secondary sanctions and the build-up of tensions, leading Tehran-based observers to say that Trump has helped to make Iranian steel more competitive.

“As a result of devaluation of Iranian currency — mainly caused by the US secondary sanctions — the Iranian mills are very competitive at the moment and almost all of the exporting outputs were sold for next two or three months,” an Iranian observer in Tehran told S&P Global Platts.

The Iranian rial has lost around 4.5% against the US dollar over the last 20 days.

While some costs have increased amid the current tensions, including on freight from the Persian Gulf and insurance, export prices are still attractive for importers and more than in the domestic market, the observer said.

Export levels rise

Iran’s main steel producers, excluding small private sector mills, exported 5.2 million mt of finished and semi-finished steel in the first nine months of the current Iranian year (to December 21), a 19% increase from the same period last year. However, in the past month alone exports totaled 485,000 mt, a 91% increase year on year, according to statistics from Iranian mines and metals holding group Imidro.

Most of Iran’s steel exports go to countries in East Asia and the Middle East.

Mobarakeh Steel Company (MSC) exported 1.1 million mt in the nine-month period, 47% more than the same period a year ago, and in the last month (to December 21), its exports totaled 99,000 mt, a 648% year-on-year increase. Some 593,000 mt of slab, a semi-finished steel product, were exported during the period by an MSC-affiliated company, Hormozgan Steel Company (Hosco) in the nine months, a 19% increase on year.

With some 1.37 million mt of slab and billet, another semi-finished product exported during this period, Khouzestan Steel Company (KSC), Iran’s second-largest producer, reported a 17% year-on-year decrease in exports. In the last month 108,000 mt of semi-finished products were exported by KSC, a 22% decrease on year, with the fall-off attributed to greater domestic sales.

South Kaveh Steel (SKS) exported 608,000 mt of billet, 23% more than the same period last year and in the last month its exports totaled 56,000 mt, a 33% decrease.

During the last Iranian year (to March 20), the country’s major steel producers exported 5.54 million mt of steel, down 25% on the previous year.

Iran’s steel production capacity is expected to reach 43.6 million mt/year by the end of the next Iranian year (March 20, 2021), while Imidro estimates the actual production to hit 31.1 million mt/year as the country continues with an ambitious steel capacity expansion program. Iran’s current steel production capacity is 35 million mt/year.