Monday November 5, 2012

I've Been Thinking:

Once again Iran is masterfully getting around sanctions to help buoy herself up and make certain that she remains competitive in the steel market.

Iran is a very large producer of steel. The Islamic Republic produces steel for internal needs and for production, not just for export.

But they need the raw materials. They need coke and coal and metallurgical coal, known in the business as coking coal.

So where are they getting these raw materials? From the Ukraine.

The raw material arrives in Iran via third party intermediaries and foreign banks. It gets shipped to Iran by way of the Black Sea. While sanctions monitors are busy watching for oil and checking out the Persian Gulf, Ukrainian companies are just bringing in the raw materials the other way.

A company can make as much as $25 million a month providing these raw materials to Iran. The important element here is that bringing coal to Iran is not a violation of the sanctions. Selling steel to Iran, now that is a violation.

The EU wants to stop all trade with Iran. But the UN and the US understand the need to provide humanitarian goods. But what happens when those goods make Iran stronger and provide her with the raw materials for a major industry.

As I said, Iran has, again and again and again masterfully gotten around the sanctions.

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