Reuters reported that steel exports to Iran, one of the world's top importers of billet used in construction are grinding to a halt as crippling US led sanctions have left local buyers without access to major currencies.

A steel trader based in Britain said that ran is the only market in the world that can move billet prices and now trading has basically come to a halt.

Commodities traders said that new US and EU financial sanctions imposed since the beginning of this year to punish Tehran over its nuclear program are playing havoc with Iran's ability to buy imports and receive payment for its oil exports.

Iranian buyers cannot obtain dollars or euros, forcing them to offer letters of credit in alternative currencies such as the Indian rupee, Korean won and Russian roubles. Most steel traders, wary of currency risk and taxation issues are not willing to accept this form of payment.

A steel trader at a Swiss metals trading house said that now you can really feel the effects of the sanctions imposed by the US and Europe. It is very difficult to do any business with Iran at the moment.

Thanks to large scale building programs in the last few years, Iran has become one of the top importers of steel billet, a semi finished long steel product mainly used for construction.

According to data from the International Steel Statistics Bureau, the country imported over 3 million tonnes of semi finished steel products in 2010 and almost 2 million of hot rolled coil, a steel product used in transport, construction, shipbuilding and energy pipelines.

Mr Boris Krasnojenov an analyst with Moscow based Renaissance Capital said that monthly Iran imports from Russia were over 300,000 tonnes for most of last year. As far as I know, the situation is much worse. Some say CIS mills cut sales 10 times."

He said that the collapse in Iranian imports is depressing international steel billet prices which fell by about USD 50 a tonne in a month to USD 560 per tonne fob Russia and Ukraine this week. All volumes from the Caspian Sea will be redirected to the Black Sea. That is a major problem for Russian steel plants.

(Sourced from Reuters)