I. Overview of the Incident

On March 27, 2026, local time, the United States and Israel carried out precision airstrikes against Iran's two core steel plants, Mobarakeh Steel Company and Khuzestan Steel Company, in Isfahan. The accompanying power plant serving Mobarakeh Steel was also destroyed, leading to a complete halt in production at both major steelworks.

From an industrial fundamentals perspective, Iran's national crude steel capacity is approximately 55-58 million tons per year. Mobarakeh Steel has an annual crude steel capacity of 11.8 million tons, accounting for over 20% of the national capacity, while Khuzestan Steel has an annual capacity of 3.6 million tons. Together, their combined capacity accounts for approximately 27% of the national total, and their actual output represents nearly 50% of Iran's total production. The concentration is even more pronounced on the export side: Mobarakeh Steel contributes over 60% of Iran's flat steel exports, being the only fully integrated flat steel producer in Iran. Khuzestan Steel accounts for more than 40% of Iran's billet and long steel exports. These two plants are the absolute pillars of Iran's steel exports and core sources of steel supply for the Middle East and Southeast Asia regions. This production halt has directly triggered an imbalance in supply and demand in regional and even global steel imports and exports.

II. Fundamentals of Iran's Steel Exports

Based on global steel trade monitoring data, in 2025, Iran's total exports of finished steel and billets reached approximately 10.8 million tons, accounting for 35% of its domestic crude steel output, making it Iran's second-largest export revenue generator after oil and gas. The export structure and destinations exhibit a highly concentrated pattern.

(A) Export Product Mix

Semi-finished products such as billets and slabs: approximately 5.4 million tons, accounting for 50% of total exports.

Long products like rebar and sections: 2.7 million tons, accounting for 25%.

Flat products like hot-rolled coil, cold-rolled coil, and galvanized steel: 1.6 million tons, accounting for 15%.

Other varieties including pipes and special steel: 1.1 million tons combined, accounting for 10%.

(B) Export Regional Destinations

The Middle East is the largest export destination for Iranian steel, accounting for over 53% of total exports. Iraq is the single largest importer of Iranian steel, with over 80% of Iraq's imported steel originating from Iran. The UAE and Oman serve as core transit hubs for Iranian steel, handling transshipment volumes reaching the million-ton level annually.

Southeast Asia accounts for over 30% of Iran's exports. Thailand is the largest single buyer of Iranian billets, while Indonesia and Malaysia are stable importing countries.

Additionally, South Asian countries like Pakistan and Afghanistan, as well as Southern European countries like Italy and Spain, import smaller volumes of Iranian steel.

III. Detailed Impact Assessment on Imports and Exports by Dimension

The impact of this airstrike on steel imports and exports is characterized by rapid short-term effects, sustained medium-term repercussions, and differentiation by product type and region. Based on the plants' capacity, export share, and downstream demand, the author makes the following projections:

(A) Impact on Iran's Own Exports

Short Term (1-3 months): Due to the destruction of the power plant and damage to production lines at Mobarakeh Steel, flat steel exports are nearly at a standstill. With smelting and rolling lines damaged at Khuzestan Steel, billet and long steel exports are directly cut by half. Iran's monthly steel exports will plummet from around 900,000 tons under normal conditions to 350,000-450,000 tons, representing a year-on-year decline of 50%-60%, leading to a significant drop in export revenue.

Medium Term (3-12 months, under a slower-than-expected recovery scenario): If the repair of core production lines and the power plant at the two major plants lags, Iran's total annual exports of steel and billets could be revised down from 10.8 million tons to 5-6 million tons, a reduction of approximately 5-5.5 million tons for the year, creating a global supply gap. This includes a flat steel gap of 3-3.5 million tons/year and a billet + long steel gap of 2-2.5 million tons/year, which would be difficult for other smaller Iranian steel mills to compensate for in the short term.

(B) Impact on Key Importing Countries/Regions

Iraq: As the most directly affected country, Iraq relies on Khuzestan Steel for 70% of its construction long steel and on Mobarakeh Steel for 90% of its industrial flat steel. The supply cutoff from Iran poses an immediate risk of raw material shortages for local infrastructure and construction projects. Spot prices are rapidly increasing, forcing procurement demand to shift to countries like China, Turkey, and Russia, with import costs expected to rise by 20%-30%.

UAE & Oman: As core transit hubs for Iranian steel handling over 3 million tons annually, the export disruption directly halts regional re-export trade. Steel inventories in the Persian Gulf region are depleting quickly, with flat steel and billet prices leading the upward trend, and the regional trade hub function is constrained in the short term.

Southeast Asia (Thailand, Indonesia): Thailand imports 90% of its Iranian billets from Khuzestan Steel. The supply shortage for local re-rollers will directly push up billet premiums in Southeast Asia, shifting procurement demand towards Chinese, Indian, and Russian billets. Indonesia, as a significant importer of Iranian billets, faces widening gaps in steel for construction and manufacturing, leading to higher import costs.

South Asia & Europe: Pakistan, importing over 500,000 tons of steel annually from Iran, faces supply shortages in long and flat steel, forcing purchases from China and India. Afghanistan, almost entirely reliant on Iranian long steel, experiences significant local steel price volatility, hindering infrastructure project progress. Southern European countries like Italy and Spain import smaller volumes of high-end flat steel from Iran; their orders can shift to sources from China, South Korea, and Germany, resulting in limited overall market impact.

(C) Reshaping of Global Steel Trade Landscape

The 5-5.5 million tons/year export market vacated by Iran will be absorbed by the three major steel exporting countries: China, India, and Russia. The global steel trade flow will undergo a structural adjustment:

China: Leveraging established export channels to the Middle East and Southeast Asia, having exported over 13 million tons of steel to the seven Persian Gulf countries in 2025, China possesses ample supply capacity. It is expected to capture an additional 1.5-2.0 million tons/year, with advantageous products including hot-rolled coil, cold-rolled coil, galvanized steel, billets, and rebar. Export profit margins are expected to improve.

India: With its price advantage in long steel and billets, and strong presence in the Middle East and Southeast Asia markets, India is projected to take an additional 1.2-1.5 million tons/year, becoming a major filler of the long steel gap.

Russia: Continuing to increase its presence in Asian and Middle Eastern markets amid Western sanctions, leveraging geographical proximity and price advantages, Russia is expected to capture an additional 1.0-1.3 million tons/year, increasing its share of billet and hot-rolled coil exports.

IV. Actual Impact on China's Steel Imports and Exports

(A) Direct Impact is Negligible

According to customs data, in 2025, China's direct steel exports to Iran were only 266,700 tons, accounting for 0.22% of China's total steel exports. China's iron ore imports from Iran were approximately 5.7 million tons, representing 0.45% of total imports. Whether in terms of export supply or imported raw materials, the direct impact of this event on China's domestic steel market is almost negligible.

(B) Indirect Impact: Opportunities Outweigh Risks

Opportunities: A rigid steel supply gap is emerging in the Middle East and Southeast Asia. China's steel export orders and FOB quotations are expected to strengthen periodically. The export competitiveness of products like hot-rolled coil, billets, and rebar will improve. External demand will support domestic finished steel prices, and export enterprises will see expanded profit margins.

Risks: Uncertainty in shipping through the Strait of Hormuz increases. Should the geopolitical conflict escalate, China's steel exports to the Gulf region, which amount to 13 million tons, could face logistical disruptions, freight rate hikes, and vessel delays, adding pressure on export fulfillment.

V. Subsequent Core Indicators to Track

Juye Metal will continue to monitor the following key indicators to dynamically assess the ongoing impact of the incident on steel imports and exports:

Plant Recovery Progress: The status of repair work on production lines and the power plant at Mobarakeh and Khuzestan steel plants, the timeline for resuming production, and capacity adjustments by other Iranian steel mills.

High-Frequency Trade Data: Iran's monthly customs export data by product type and destination country, changes in the import source structure of countries like Iraq, Thailand, and the UAE, and China's steel export orders and shipment volumes.

Prices and Spreads: Spot prices for hot-rolled coil in the Middle East and rebar in the Persian Gulf, CFR billet premiums in Southeast Asia, and arbitrage windows between China's FOB prices and regional prices.

Logistics Risks: Navigational status in the Strait of Hormuz, Middle East route shipping price indices, and developments in regional geopolitical conflicts.

VI. Conclusion

The attack on Iran's core steel plants essentially represents a sudden halt in regional steel supply in the Middle East, rather than a trend reversal in the global steel market. In the short term, it will create a rigid supply gap of 5-5.5 million tons/year, with flat steel, billet, and long steel categories facing the most significant shortages. Markets highly dependent on Iranian supply, such as Iraq, the UAE, and Thailand, will bear the brunt of the impact.

For the global market, steel prices in the Middle East and Southeast Asia are expected to strengthen periodically. Global steel trade flows will rapidly shift towards China, India, and Russia, leading to a short-term restructuring of the trade landscape. For the Chinese market, the direct impact is minor; the marginal improvement in external demand significantly outweighs the logistical risks, presenting a window of opportunity for steel exports.

The core variable for the subsequent evolution of the incident lies in the actual recovery progress of the two major Iranian steel plants. If the recovery period lengthens, the supply gap will persist; conversely, the gap will close quickly. Juye Metal will continue to track the latest developments and provide timely insights into the import and export market dynamics.