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The development indicates that despite protests from Russia, that unilateral US sanctions should not affect Russian companies, the steel companies are changing their behavior for fear of US sanctions. It is to be noted that coils are shipped to Iran by Russian steelmakers Severstal and MMK along with ArcelorMittal’s plant in Kazakhstan.

Iran was one of the major importer of Russian and Kazakhstani HRC during CY’17, as the nation imported around 0.42 MnT and 0.24 MnT of HRC respectively from these two exporters. Till May’18, Russia has already exported 0.11 MnT HRC to Iran.

Impact of HRC Supply Cut on Iran

As per local sources, recent development and steel capacity expansion in Iran has boosted local production which can easily replace the dependency on Russian and Kazakhstani HRC. Iran’s net HRC consumption during CY’17 was 5.6 MnT, out of which only 0.8 MnT were imported. The countries mostly exported HRC less than 2mm thick to Iran, which was not produced in there before.

Cut in imports should not have a big effect on Iran as in Jun’18, Iran’s largest flat steel producer Mobarakeh Steel Company (MSC) began commercial production of 1.8 mm HR coil, which will substantially reduce import dependence of the country for the less than 2 mm thick HR coil. The company claims that it will ramp up production to completely substitute imports within a year.

It can be clearly said that the impact of HRC cut from Russia and Kazakhstan will very negligible and Iran would easily replace the dependency on imports.