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Iran boosts steel output and exports in bid to buffer impact of sanctions

Iran is increasing steel exports and courting foreign investors in an ambitious bid to quadruple steel output in a decade and replace at least a small part of the massive revenue it loses due to sanctions on its oil sales.

According to a presentation by Iran’s top steelmaker, Mobarakeh Steel, a developing economy heavily reliant on construction, the Islamic Republic exported an average of 1.35 million tonnes of steel in 2011 and 2012.

Data from the Iran Steel Producers Association showed that by contrast it exported 1.26 million tonnes of steel during the first seven months of this year.

Mr Bahador Ahramian, a member of the ISPA’s board said that “Due to the fast expansion of the local production in recent years, Iran has a surplus of rebars, billets, IPE (I-beams) and other similar sections.”

The bulk of Iran’s steel exports go to the Middle East and north Africa, and can involve barter deals or funds deposited in non Western banks to circumvent sanctions.

Iran was never barred from selling steel under sanctions imposed by the United States and the European Union over its disputed nuclear programme. But financial restrictions banning banks from processing dollar payments for Iran deals have made trade difficult.

Iran’s steel sector pales in comparison to oil, one of the main parts of its economy targetted by sanctions. The value of crude oil sales Iran loses each month from sanctions is estimated at nearly USD 4 billion. By contrast, Iran’s steel exports to July this year would be worth some USD 6.3 billion, based on current prices.

Mr Javad Ardalan, director of Iran Trade and Investment, a London based consultancy with offices in Tehran said that the additional revenue is important, as it insulates the steel sector from sanctions by making it self sufficient. Steel and iron ore is a strategic industry for Iran. If there isn’t enough steel in the country the construction industry will grind to a halt and another 50 or so related industries will be hurt. It will cause huge unemployment.

Source – Reuters

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