Morgan Stanley warns that recent damage to Iran's steel production base could tighten seaborne availability for selected products and trade routes, with particular pressure on the Middle East and parts of Asia.
According to the bank's assessment, damage has affected one or more major producers, reducing steelmaking capacity by an estimated 13 to 15 million tonnes per annum. Of that total, Mobarakeh Steel accounts for roughly 9 to 10 million tonnes per annum of the impacted capacity, while Khuzestan Steel Company represents about 4 to 5 million tonnes per annum.
In percentage terms, the disruption equals approximately 24% to 27% of Iran's installed steelmaking capacity, which Morgan Stanley places at around 55 million tonnes per annum. The bank also frames the lost capacity as equivalent to roughly 41% to 47% of Iran's projected 2025 crude steel output of about 32 million tonnes.
Morgan Stanley highlights the country's trade flows to show the potential market impact. Iran exported around 11 million tonnes of steel in 2024, representing roughly 2% to 3% of global steel exports. The country additionally shipped about 0.8 million tonnes of direct reduced iron, or around 7% of global DRI exports, and roughly 22 million tonnes of iron ore, equivalent to about 1.3% of world iron ore exports.
Faced with the operational disruption, the bank says buyers across the Middle East and Asia could be forced to source alternative supplies. Morgan Stanley estimates that at least 23 million tonnes of seaborne iron-linked units are at risk of disruption, which it equates to about 3% of the seaborne market outside China.
The bank's figures on Iran's production base are included to underline the scale: Iran produced approximately 37 million tonnes of direct reduced iron in 2025, which Morgan Stanley says represents about 25% of global DRI output, and about 68 million tonnes of iron ore, or roughly 3% of world iron ore supply.
Conclusion - Morgan Stanley's analysis suggests that damage to sizable Iranian steelmaking assets has the potential to remove a material share of regional seaborne supply, prompting buyers in nearby markets to seek alternatives and placing pressure on selected trade lanes and product segments.