According to Iran’s Mehr News Agency, as reported by CCTV International News on March 27, the United States and Israel carried out airstrikes on the Khuzestan Steel Plant in Iran and the Mobarakeh Steel Plant in Isfahan, with the power plant affiliated with the Mobarakeh Steel Plant also being targeted.

The airstrikes reportedly caused severe damage to the core substation (power facilities) of the Mobarakeh plant and a special alloy steel production line. The Khuzestan Steel Plant saw its large storage facilities and some logistics routes destroyed.

The choice of these two major steel plants by the US and Israel as targets was not purely an economic sanction but carried significant military and strategic considerations. This incident will have major impacts across the following four dimensions:

Military and Strategic Strikes

Disrupting the supply chain for military materials: Steel is the backbone of military industries. The specialty steel and alloy steel produced at Mobarakeh are indispensable raw materials for Iran’s production of ballistic missiles, high-precision drones (such as the Karrar series), and naval vessels. Destroying the alloy steel production line directly creates a physical bottleneck for Iran’s weapons expansion.

Targeting the Islamic Revolutionary Guard Corps’ (IRGC) financial resources: These two major steel plants are considered by Western intelligence agencies to be deeply tied to Iran’s IRGC. Striking them not only cuts off military material supplies but also disrupts the flow of foreign currency earned by the IRGC through steel exports, which is used to fund its network of regional proxies.

Devastating Impact on Iran’s Domestic Economy

Billions of dollars in direct economic losses: Beyond the direct cost of rebuilding the plants, the production halt could result in tens of millions of dollars in lost revenue daily.

Paralysis of domestic industries: As the Mobarakeh Steel Plant supplies the majority of Iran’s automotive and appliance-grade steel, the destruction of its power facilities and production lines could lead to a severe "supply chain disruption" for Iran’s automotive manufacturing, energy infrastructure, and civilian construction sectors, potentially triggering industrial inflation and mass unemployment.

Impact on Global and Regional Steel Supply Chains

Shortage of semi-finished steel in the Middle East: Iran is a key supplier of low-cost steel billets and slabs to markets such as the Middle East, Oman, and Indonesia. Damage to the Khuzestan Steel Plant (a major export hub) and the subsequent halt in exports could suddenly remove millions of tons of supply from the international market. Given that Iranian steel exports had already been disrupted due to the war, this attack will further delay the timeline for resuming exports.

Regional steel prices pushed higher: Downstream steel mills in neighboring countries (such as the UAE, Saudi Arabia, and Turkey) will be forced to seek alternative sources from Russia, India, or China, likely driving up semi-finished steel prices in the Middle Eastern and Asian markets in the short term.

A Watershed Moment Marking Escalation of Conflict

In the past, US and Israeli strikes on Iran primarily targeted nuclear facilities, radar systems, or missile positions. Targeting heavy industrial enterprises with dual-use (civilian and military) applications, such as major steel plants, signals a shift toward a phase of broader destruction aimed at undermining war-making capabilities and the national economic foundation. This will likely prompt Iran to adopt more aggressive retaliatory measures (such as further blockades of the Strait of Hormuz), posing greater risks to energy and logistics security in the Middle East and globally.

Iran is expected to retaliate by targeting steel plants in the Gulf region and Israel, which could further impact steel supplies.