The bombings of Iran’s two largest steel producers, Mobarakeh Steel in Isfahan and Khuzestan Steel in Ahvaz, triggered a strong reaction inside Iran – much of the conversation focused on whether the two plants were legitimate military targets.
Some have argued that the sites were directly or indirectly linked to the economic networks sustaining the state and the Islamic Revolutionary Guard Corps (IRCG). Others saw these attacks as an attack on civilian industrial infrastructure in a country that was already under severe pressure due to American-Israeli bombing.
However, few are concerned about the long-term effects of the end of Iran’s steel production, one of the country’s most important industrial sectors.
While Iran’s economy depends heavily on oil, the country was one of the top producers of crude steel in 2025. The World Steel Association put Iran’s annual production at about 31.8 million tonnes. Mobarakeh Steel alone had generated $860 million (€741 million) in export revenues between March 2025 and January 2026, according to company linked-reporting.
Shock to Iran’s export capacity
The impact of an air strike on a plant of this size is greater than that of Iran’s military forces. It is also a blow to supply chains, industrial employment, exports and one of the few sectors of the Iranian economy that still bears the real weight under sanctions.
The full extent of the damage is still not independently clear, and most details come from Iranian reporting and specialist commodity coverage. But the broader picture is consistent.
Argus Media, an organization focusing on global energy and commodity markets, reported that the attacks damaged storage facilities and power infrastructure at both Khuzestan Steel and Mobarakeh, and said the attacks were expected to reduce Iran’s production and its export potential.
wall street journal Khuzestan Steel was reported to have halted operations, while Mobarakeh remained operational despite the damage.
Steel production is also largely dependent on the continuous supply of electricity. When substations, captive power plants or production lines are affected, the effects often extend far beyond the immediately damaged units.
Iran’s hopes for economic recovery are fading
An Iran-based economist told DW that the longer the war lasts, the more capital and state resources will be diverted toward the conflict and away from managing Iran’s already troubled economy.
The economist, speaking on condition of anonymity, also said that the deeper effects may become apparent only after the war.
But even now, Iran is dealing with war damage in addition to sanctions, inflation and long-term economic mismanagement. If the fighting ends without political change and with sanctions still in place, many skilled workers could choose to leave the country and make Iran’s economic recovery even more difficult, the source warned.
US-Israeli attacks cause billions of dollars in direct losses
Economist Hassan Mansour told DW that reports of the strikes indicated that power generation units, parts of iron and steel workshops and alloy-steel production lines were affected.
He said direct losses could be in the range of $5 billion to $6 billion, but argued that the broader damage to the national economy could be far greater, with disruption to a wide range of construction, manufacturing and downstream sectors.
This assessment fits with the broader strategic importance of the metallurgical sector for Tehran. The US Treasury has long considered Iranian steel a major source of state revenue. In 2020, it sanctioned entities linked to Mobarakeh Steel and reported that Iran’s metals industry generated billions of dollars in export revenues.
No way to return to Iran’s steel production?
Alireza Salavati, an economic worker, believed that some damaged units could technically be repaired within a few months if the destruction was not too widespread. But he said the more serious problem lies elsewhere.
According to Salavati, parts of the steel industry operate on narrow margins. If those sections are badly damaged, rebuilding them may no longer make economic sense. In such cases, he said, it may be cheaper to import steel than to restore some of the damaged units.
This is where the long-term danger becomes clear. Visible damage from air strikes is only part of the story. More lasting effects may come later, if damaged sections are not fully rebuilt, production remains low, and supply chains begin to weaken.
People’s livelihood at stake
The social consequences may also be substantial. wall street journal Khuzestan Steel employs approximately 10,000 workers, many of whom are contractors with little job security, the report said. Prolonged production shutdown will affect not only the plant workers but also the subcontractors and dependent industries.
For years, Iran has depended on steel and other metals as one of the most important non-oil sources of foreign exchange. This is one reason why the sector has come under repeated pressure of sanctions. That’s why the attacks matter beyond immediate wartime calculations: They strike a sector that sits at the intersection of industrial production, exports, employment and state revenues.
For many Iranians, this is the real significance of the attacks. These strikes were not just against steel plants. They were against a sector that helps hold together a large part of the country’s industrial economy.
And if that field weakens further, the results are unlikely to last inside the factory gate.
Edited by: Darko Janjevic