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Iran steel export to Afghanistan halted, may resume in weeks: sources

Highlights

Iran is biggest steel supplier to Afghanistan

Iran's overall steel exports grow on-year

Iran's exports of steel to neighboring Afghanistan have been suspended amid the current political and logistical turmoil in Afghanistan, Iranian steel industry sources told S&P Global Platts.

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Iran is Afghanistan's biggest steel supplier, typically exporting 300,000 mt – 350,000 mt/year to that nation, accounting for around 25% of Afghanistan's total steel imports, according to the sources. The exports are mainly of construction steel rebars produced by Esfahan Steel (ESCO) and by Khourasan Steel Co., which is close to Herat province, in western Afghanistan. Earlier this year ESCO signed an accord to supply steel rails to Afghanistan, according to local reports.

The fall of the city of Herat to the Taliban Aug. 12 in the group's offensive to take control of the country from the government of president Ashraf Ghani was considered a blow to Iranian steelmakers.

Steelmakers in Turkey, Pakistan, China and CIS nations also supply Afghanistan. The country also has some local domestic scrap-based billet and rebar production.

Iran's steel exports to Afghanistan started to dry up several weeks ago but the sources expect this trade to resume within weeks due to the importance of this market and the proximity to Afghanistan of some Iranian steel mills, which makes Iran a natural supplier.

"Export to Afghanistan, which was an important target market for rebar mills has been suspended about one month ago and there is no steel trade with this country at the moment," a Tehran-based trader told Platts Sept. 1. "Shipment of fuel to Afghanistan has begun but steel is not a top priority of this country for the time being."

A 225-kilometer railroad between Khaf in eastern Iran and Herat was inaugurated in December 2020, facilitating Iranian shipments to Herat.

Steel exports up 101% on year in four months

Despite the suspension of steel exports to Afghanistan, and lower steel production within Iran in recent weeks due to a water shortage which hit electricity supplies to mills, Iran's steel exports have continued to grow.

Statistics from Iranian state mines and metals holding group Imidro show the main Iranian steel producers, excluding small private sector mills, exported 2.85 million mt of finished and semi-finished steel over the first four months of the current Iranian year (March 21– July 22), a 101% increase from the same period last year. In the past month alone exports totaled 774,000 mt, a 52% increase on year, Imidro said.

Mobarakeh Steel Co. (MSC) -- the country's largest producer -- increased its exports to 436,000 mt in the four-month period, 241% higher than the same period last year. In the past month alone, its exports totaled 169,000 mt.

With some 747,000 mt of billet and slab exported during the four-month period, Khouzestan Steel Co. (KSC), Iran's second-largest producer, registered an 85% on-year increase in exports.

About 427,000 mt of finished and semi-finished products were also exported by Esfahan Steel Co. (Esco), showing a 51% increase on year.

Semi-finished products currently constitute the bulk of Iran's export, according to the Tehran-based trader.