US Likely to Exempt India from Iran Sanctions

Bringing relief to trade participants from both India and Iran comes the news that India is likely to receive waiver from U.S. sanctions to carry out trade with Iran. As per the recent updates, U.S. has agreed to grant waiver to India from the sanctions on Iran by levying a condition for Iran to cut its oil imports by one third for the financial year 2018-19.

U.S. is set to announce secondary sanctions on Iran from 4 Nov'18, which will target Iran's banking, insurance and shipping sector. Now with India getting waiver from these sanctions is definitely a good news for Indian and Iranian steel, ferroalloys and GE exporters.

It is to be noted that India and Iran are indulge in steel raw materials with each, India is one of the largest exporter of ferro alloys and graphite electrode to Iran and recently Iran also started exporting Iron ore to India.

As per Mr. Keyvan Jafari Tehrani, a renowned market analyst from Iran, "This news is really positive and definitely it will turn to a better trade relation between Iran and India. Before some time, I was not optimistic about the import from GE and Ferro Alloys from India because the exporter were quite frightened from US as they import needle coke from US to make GE and if they export GE to Iran then they were afraid that US will stop exporting needle coke to them. But now I believe that they will be in a better position to export GE and ferro alloys to Iran."

Mr. Tehrani added, "One of the biggest problem in Iran is unavailability of INR, as currently it is being negotiated between India and Iran that 55% of crude oil payment will be made in Euros and 45% in INR through UCO Bank. Once this happens then Iran can purchase ferro alloys and GE from India through this money."

As per one of the representative from Khouzestan Steel Company, "This is really a great news, but it is to be noted that Iran is facing sanctions from US since a very long time and Iran always find a way to do trade with their allies."

As per sources from Iran's Esfahan Steel Company (ESCO), "Iran import ferro alloys and GE from India and India buys iron ore from Iran. I think Iran can import steel requirement by swapping oil money. So it is a good news for steel."

As per Mr. Mehrad Ghorbani, one of the prominent ferro alloys producer and trader from Iran "Iran is one of the largest importer of ferro alloys of India, this waiver will help both the nations to do business easily. "

How sanctions impacted Iran's Graphite Electrode market?

Iran's reliance on graphite electrodes imports from India and China is quite high as country's crude steel production via EAF (electric arc furnace) route is as high as 85%.
For 2018, Iran had imported about 61,675 tonnes of GE during (Jan-Jul'18) a y-o-y increase of 54% against the corresponding period of previous year. For current year, GE import happened till July only as GE supplying companies from both the countries stopped their business with Iran amid sanctions from the August month.

From August Iranian steel mills were carrying out their steel production using the stocks of graphite electrodes which they have purchased before sanctions were imposed and were very much worried about its supplies for the upcoming months. With this news of India getting waiver, Iranian steel makers are quite relived.

According to Mr. Anil Malhotra from Tuf Group, one of the major exporters to Iran has commented "This is indeed very good news for the industry. However, Indian government should look at ways to reduce balance of trade which will be heavily tilted towards Iran as Indian value of imports (even after one-third cut in crude oil imports) from Iran will exceed its value of exports to the country."