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New EU sanctions cripple Iranian steel purchases
Source: Agencies |
November 12, 2012, Monday
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IRANIAN manufacturers and builders face serious shortages of steel and other metals as a new European Union export ban adds to troubles for an economy already reeling from sanctions on its finances and oil exports.
Reliant on imports to make up a shortfall in its own steel output, data show Iran's purchases of foreign steel already falling as buyers are being hit by EU and US measures which hinder banks, insurers and others supporting trade with Tehran until Iran agrees to alter its nuclear program.
Short of major currencies, some Iranian steel buyers have resorted to barter deals. But explicit sanctions imposed by the EU on October 15 on sales of steel, aluminum and other key materials have prompted some traders to halt all sales and Iranian businesses now face rising prices and scarce supply.
Given steel's central role in the economy, in the skeletons of new buildings or for constructing machinery, disruption to trade in the metal may cause far-reaching damage - exactly the aim of the Western powers who want to prevent Iran developing nuclear weapons and reject its denials that it has any such aim.
"The ban on metals like aluminum and steel recently imposed by the EU has a sort of 'multiplier' effect of pushing the Tehran government into a new cycle of activities to dodge the effect of the sanction, a course which will end up creating new complications and pushing up costs," said J. Peter Pham, a director with US think-tank the Atlantic Council.
"At the current pace, Iran's ... industrial base will be rendered a cripple."
Slowing activity
Iran has imported up to 10 million metric tons (11.02 million tons) of steel annually in recent years but data from the International Steel Statistics Bureau suggest a declining trend, even before the EU ban. Imports were 4 million metric tons in the first nine months of this year, almost a quarter down from the same period last year.
Builders across Iran are suspending construction projects and channeling any spare funds into land purchases or safe-haven assets like gold in a frantic bid to hold onto the value of their wealth rather risk long-term investments.
"Sanctions have completely crippled all civil projects. Now even the strongest contractors have stopped works," Farid, 49, who runs a major Tehran building firm, said by e-mail.
Another Tehran executive, a 42-year-old engineer, said his company had put off building a factory due to problems obtaining key materials from Europe. "Industry has become seriously weakened," he said by telephone.
In a measure of official concern over supplies for industry as the value of its currency has slumped along with sanctions-hit oil exports, Iran has banned its firms from exporting steel. It is also trying to boost it domestic production but that will take years to end the need for imports.
Reliant on imports to make up a shortfall in its own steel output, data show Iran's purchases of foreign steel already falling as buyers are being hit by EU and US measures which hinder banks, insurers and others supporting trade with Tehran until Iran agrees to alter its nuclear program.
Short of major currencies, some Iranian steel buyers have resorted to barter deals. But explicit sanctions imposed by the EU on October 15 on sales of steel, aluminum and other key materials have prompted some traders to halt all sales and Iranian businesses now face rising prices and scarce supply.
Given steel's central role in the economy, in the skeletons of new buildings or for constructing machinery, disruption to trade in the metal may cause far-reaching damage - exactly the aim of the Western powers who want to prevent Iran developing nuclear weapons and reject its denials that it has any such aim.
"The ban on metals like aluminum and steel recently imposed by the EU has a sort of 'multiplier' effect of pushing the Tehran government into a new cycle of activities to dodge the effect of the sanction, a course which will end up creating new complications and pushing up costs," said J. Peter Pham, a director with US think-tank the Atlantic Council.
"At the current pace, Iran's ... industrial base will be rendered a cripple."
Slowing activity
Iran has imported up to 10 million metric tons (11.02 million tons) of steel annually in recent years but data from the International Steel Statistics Bureau suggest a declining trend, even before the EU ban. Imports were 4 million metric tons in the first nine months of this year, almost a quarter down from the same period last year.
Builders across Iran are suspending construction projects and channeling any spare funds into land purchases or safe-haven assets like gold in a frantic bid to hold onto the value of their wealth rather risk long-term investments.
"Sanctions have completely crippled all civil projects. Now even the strongest contractors have stopped works," Farid, 49, who runs a major Tehran building firm, said by e-mail.
Another Tehran executive, a 42-year-old engineer, said his company had put off building a factory due to problems obtaining key materials from Europe. "Industry has become seriously weakened," he said by telephone.
In a measure of official concern over supplies for industry as the value of its currency has slumped along with sanctions-hit oil exports, Iran has banned its firms from exporting steel. It is also trying to boost it domestic production but that will take years to end the need for imports.
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