India: US-Iran tensions trigger stainless steel output cuts amid gas shortages

• • Freight surge lifts scrap import costs

• • Gas shortage impacts rolling operations

• • Mills cut production by around 30%

Rising geopolitical tensions between the United States and Iran are beginning to disrupt India’s stainless steel value chain, with several mills reporting production cuts of around 20-30% amid tightening industrial gas availability and rising logistics costs. Market participants said the impact is most visible in downstream rolling operations that rely on LPG and PNG-fired reheating furnaces.

Freight costs for imported stainless steel scrap have risen sharply amid shipping disruptions. Freight from Malaysia has increased to nearly $110/t from around $60/t earlier, while container freight from Thailand has doubled to roughly $2,200 per 20-foot container. Supplies from the United Arab Emirates, which exports around 100,000-140,000 t of stainless steel scrap annually to India, may also face delays as tensions affect Gulf shipping routes. As a result, some Indian buyers have paused fresh import bookings and shifted part of their procurement to the domestic scrap market.

Domestic scrap availability is also tightening. Market participants said gas-cutting operations at scrap yards have been halted in some regions due to limited fuel availability, restricting scrap processing activity and lifting domestic prices.

Industry participants confirmed that gas supply disruptions are forcing mills to reduce utilisation. “Plants running on furnace oil are operating normally, but units dependent on LPG or PNG are facing difficulties,” said a stainless steel producer. Gas-fired reheating furnaces in rolling mills are among the most affected operations.

“Everyone has to cut down- there is no choice. At least 30% production reduction is likely if the situation persists,” another industry participant said. One mill reported operating at around 4,000-4,500 t output against an installed capacity of 5,000 t.

Export shipments are also facing delays as shipping lines introduce war-risk surcharges of $1,0004,000 per container and container availability tightens.

In the near term, higher freight costs, logistics disruptions and gas shortages may tighten supply and support stainless steel prices in the domestic market.