In response, the UK, Germany and France called on the US not to take any steps which would be detrimental to other countries which would like the agreement to remain in place.

In July 2015, Iran, the P5+1 group (the five permanent members of the United Nations Security Council - China, France, Russia, the United Kingdom and the United States - plus Germany), and the EU agreed on a Joint Comprehensive Plan of Action to allow Iran to continue its nuclear program subject to strict regulation.

Under the international agreement, Iran agreed to eliminate its stockpile of uranium and provide regular access to all its nuclear facilities to the International Atomic Energy Agency (IAEA).

In return, Iran received relief from the nuclear-related economic sanctions imposed by the US, EU and UN Security Council, including those restricting connection to the SWIFT system for international financial telecommunications.

The agreement helped Iran to boost its international steel trading volumes, and in particular to increase its export activities. This was crucial to the country because of its growing steelmaking capacities.

Between 2015 and 2016, Iran’s exports increased by 53% to 5.6 million tonnes. In 2017, Iran’s steel exports increased by 32% year-on-year to 7.4 million tonnes, according to information provided by international trade administration of the US Department of Commerce.

Semi-finished products accounted for the largest share of Iran’s steel exports in 2017, at 80% or 5.9 million metric tons. Long steel products made up 10% (748,000 tonnes), followed by flat steel products at 8.5% (627,000 tonnes), pipe and tube at 1.5% (113,000 tonnes), and stainless steel at 0.013% (1,000 tonnes).

Market participants including Iranian steelmakers, and customers in major outlet regions such as the Middle East, North Africa and Asia, started to voice concerns that the US decision to quit the nuclear agreement would have a negative effect on the country’s steel exports and consequently on output.

“If Iran has to cut its steel export volumes [because it is] unable to finance deals, it will have to reduce steel output because the domestic market will not be able to consume it, despite recent demand improvements,” an Iranian producing source told Metal Bulletin.

European banks foresaw such a situation and some of them, such as Austria’s Oberbank, froze operations a couple of months ago, according to a source involved in trading Iranian steel products. This source spoke to Metal Bulletin on the sidelines of the 78th meeting of the International Rebar Producers & Exporters Association (Irepas) in Poland, earlier this week.

Nevertheless, sources do not expect Iran to completely stop exporting steel. The United Arab Emirates, which is one of the major buyers and trading hubs for Iranian steel, is expected to continue to buy Iran-origin billet even if sanctions are reimposed.

“Iran was purchasing steel through the UAE when it was under sanctions, and I believe they will find a way to establish trade if new sanctions are imposed,” a Middle East-based buyer of Iranian billet told Metal Bulletin on the sidelines of the Irepas meeting.

“All in all, the UAE needs Iranian billet as much as Iran needs the UAE market to sell it,” he added.

The reduction of the available volumes of semi-finished steel from Iran is, however, expected to influence billet and slab prices in the global market, pushing them upward.

Metal Bulletin’s weekly price assessment for Iranian export billet was $495-505 per tonne fob on Wednesday May 9, up from $480-500 per tonne fob a week earlier.