CRU expects little stainless steel disruption or direct impacts across the stainless steel, nickel, chrome, and molybdenum value chains due to limited demand and few production assets in the Middle East. Some indirect effects are still at play – particularly if supply issues around energy and petrochemicals persist. Indonesian nickel producers face uncertainty around chemicals supply, while chrome assets in the region are present but limited, making stainless steel disruptions possible in a longer conflict, but unlikely in the short term.
Potential effects on supply
Chrome
Iran has several chromium mines, with the largest concentration of chromite deposits located in Feryab, in the south-eastern province of Kerman. The country is also home to several ferroalloy smelters including:
- A 60 kt/y HC FeCr smelter in Rafsanjan Special Economic Zone (Kerman Province) in operating since 2018;
- And the smaller 25 kt/y Joghatai ferrochrome complex in the northeastern Razavi Khorasan Province.
Official trade data is patchy (particularly for 2025, where only partial data is available). With this caveat in mind, Iran typically exports around 200–300 kt of chromium ore and concentrates per year, almost entirely metallurgical-grade ore to China. Please note, these volumes are a fraction of China’s total ore imports – almost 24 Mt in 2025.
As for ferrochrome, CRU understands that all Iranian output is high-carbon. While China has historically been the main destination for Iranian HC FeCr, it is not the only one. Despite sanctions, commercial partnerships with Europe have remained, and small volumes have also flown into Russia. Even so, volumes are modest on a global scale, according to CRU’s Chrome Market Outlook, Iran produces around 25–35 kt/y of HC FeCr – a negligible fraction of global consumption.
The war is likely to disrupt logistics and port operations, particularly in southern Iran. Most shipments of chrome ore and ferrochrome typically depart Iran’s southern ports along the coast near the Strait of Hormuz.
The other important regional player in chrome markets is Oman. The country accounts for 1% of chrome ore supply. It is also home to a number of FeCr smelters, most of which are located in the SOHAR Port and Freezone in the North-east. Oman’s ferrochrome production accounts for 2–3% of global LC FeCr supply, while its share of HC FeCr is smaller.
At this stage, we do not expect smelter operations to be materially affected. However, shipment risk is elevated, with the main exposure being concentrated around potential port-side logistics and cargo disruptions. Exports of chrome units from Oman to China are unlikely to be directly impacted, but there are still risks of delays and disruption to cargo flows. Due to its location beyond the Strait of Hormuz, Oman is less affected by shipping route disruptions compared to its neighbouring countries.
Overall, while Iran and Oman account for a small share of global chrome ore and alloy supply, any war-related disruption will contribute to further price growth in the near term due to tighter global supply and higher production, logistics and freight costs. The FeCr market is currently in deficit.
Nickel
A potentially significant impact could be seen in nickel production, specifically high pressure acid leaching (HPAL) operations where sulphuric acid is used to extract nickel from the ore. The cost of acid is a significant component of these operations, making up at least 25% of total costs. This effect is especially pronounced in Indonesia, where chemicals make up more than half of the cost. Middle Eastern sulphur exports to Indonesia accounted for around 76% of its demand in 2025.
While these producers can absorb significant price shocks for the moment due to low overall production costs and gains from cobalt leaching, a long-term price increase for sulphur could become problematic. Acid leaching currently accounts for about 20% of Indonesian nickel supply, but many new Indonesian HPAL operations are scheduled to come online in the coming years.
Molybdenum
Iran has some molybdenum by-product supply from copper facilities. This constitutes around 1% of global supply, making it unlikely that molybdenum-specific costs will be significantly affected. Still, in a finely balanced market that is occasionally impacted by disruptions, this can contribute to supply tightness.
Expectations for demand
An immediate shift in stainless steel demand is unlikely, but a prolonged conflict could have medium-term effects.
Should energy prices remain high for an extended period of time, further capex and drilling activity can be expected, which would add demand for stainless and specialty steel. Similarly, increased military spending would also require more specialty steel as well as superalloys, which would increase demand for nickel, chrome and molybdenum.
However, higher energy prices would also likely result in higher costs of living, diminishing demand for stainless-containing consumer products such as household appliances. Similarly, construction and industrial production would also suffer from higher energy costs, and the global crisis which would likely result from sustained high oil prices would lead to an overall reduction in economic activity.
As a whole, it is therefore likely that a prolonged period of conflict would diminish overall stainless demand. We will continue to monitor the situation closely as events unfold and note any developments in the CRU stainless, nickel, chrome and molybdenum services.
