By early 2025, Iran's steel sector has reached a critical stage. Following a period of rapid growth supported by aggressive investments in direct reduced iron (DRI) technology and increased electric arc furnace (EAF) capacity in previous years, Iran's domestic crude steel production reached approximately 68 million tons per year by the end of 2024, placing the country among the top ten global steel producers and establishing it as a major supplier in the region.
Production centers in Esfahan, Khuzestan, and South Khorasan played a central role in this growth and enabled Iranian iron and steel plants to shift from exporting basic raw materials to higher value-added products such as construction steel, billets, and flat steel. Export markets expanded to include parts of Southeast Asia, Africa, and Latin America, attracting increased interest from countries seeking alternative suppliers outside Western-aligned supply chains.
However, this upward momentum faces a serious challenge. With the possibility of a "snapback" of UN sanctions due to ongoing nuclear program disputes, the future of Iran’s steel exports hangs in the balance.
With diplomatic tensions escalating dramatically, France, Germany, and the United Kingdom (E3) formally activated the “snapback” mechanism under the 2015 Iran nuclear deal (Joint Comprehensive Plan of Action - JCPOA). This step makes it possible to reimpose United Nations sanctions against Iran.
The decision, announced in a joint statement last Tuesday, came as the JCPOA's “sunset” clause, set to expire in October 2024, approached and months of negotiations proved fruitless. The E3 countries argue that there is no room for further delay, given Iran's continued enrichment program and the reported purity of its uranium reaching up to 84 percent a level very close to weapons-grade.
This announcement sent shockwaves through global shipping and energy markets. Major insurance companies, led by Lloyd's of London, are reassessing coverage for ships calling at Iranian ports. Increased naval patrols and inspection operations are expected in the Strait of Hormuz, through which approximately 20% of the world's oil passes.
Iran's two largest non-oil export sectors, steel and petrochemicals, are expected to face serious disruptions. Iranian steel factories, which have recently increased production and exported to China, India, and Africa, may soon encounter obstacles in shipping and port access.
“Overseas buyers are already hesitant,” said a Dubai-based raw materials trader, adding, “Even if they don't violate direct sanctions, secondary sanctions and banking restrictions are making transactions nearly impossible.”
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