Iran is losing its steel production capacity due to the conflict in the Middle East

The Iranian steel mills Khouzestan Steel and Mobarakeh Steel were hit by airstrikes carried out by the U.S. and Israel on March 27, damaging their storage and power supply infrastructure, according to Argus.Media.

This is expected to lead to a reduction in the production of billets and slabs and the country’s export capacity in this segment.

According to Velayat Hayati, deputy head of security for Khuzestan Province, Khouzestan Steel—Iran’s second-largest steel producer (with 4.2 million tons of steel produced last year)—suffered strikes on two storage silos. Preliminary assessments indicate that there is no impact on blast furnaces No. 1 and No. 2, which were not in operation at the time.

Meanwhile, at Mobarakeh Steel in Isfahan Province (steel production in 2025 amounted to 7.1 million tons), a substation, a line for the production of alloy steel, and power generation facilities were damaged. As of March 27, an inspection of production was underway, and it was reported that some units might experience short-term shutdowns. Later that same day, the company confirmed that direct reduction facilities and parts of its 914 MW and 250 MW power plants in Isfahan had been damaged.

The day before, on March 27, the Foolad Atieh (Asia Steel) plant was struck; no official data on production losses has been released.

According to Worldsteel, Iran’s exports of semi-finished steel products in 2024 amounted to approximately 550,000 tons per month.

Mobarakeh Steel Company, notes SteelOrbis, is the main producer of flat steel in Iran; the company’s production capacity exceeded 8 million tons of DRI and about 7 million tons of hot-rolled steel per year. Together with Khouzestan Steel Company, it was one of the main exporters of slabs before the conflict escalated. The latter was also one of the country’s key producers and exporters of billets.

On March 27, the Tasnim news agency published a warning from Iran regarding the possibility of strikes on steel mills in Israel and five Gulf countries if attacks on Iranian facilities continue. The list of targets includes Hadeed (Saudi Arabia), Emirates Steel Arkan (UAE), Qatar Steel (Qatar), Foulath (Bahrain), Kuwait Steel (Kuwait), and Yehuda Steel (Israel).

Meanwhile, on March 28, two aluminum producers in the Middle East—Emirates Global Aluminium and Aluminium Bahrain—were hit by Iranian attacks, Bloomberg reported. Emirates Global Aluminium stated that it had suffered “significant damage” at its facility in Abu Dhabi, while Aluminium Bahrain said it was assessing the extent of the damage.

As a reminder, the Indian steel industry has faced a gas supply shortage—disruptions in fuel and maritime operations amid the escalation in the Middle East have begun to affect companies.