(Extends timeframe in paragraph 6 to years from months)
* Balli focused business on Middle East and Iran
* Other firms cut steel output as Iran sanctions hit sales
By Silvia Antonioli
LONDON, April 2 Trade sanctions against Iran and
the bankruptcy of U.S. steelmaker RG Steel were among the
troubles that forced London-based commodities trader Balli to
enter administration, industry sources said.
Privately owned Balli Group plc and two of its affiliates
entered administration on March 20, with Deloitte LLP appointed
Many European steel traders have been suffering in the past
year due to tighter credit availability and a shrinking market
in the region, but Balli was hit particularly hard by tighter
U.S. and EU restrictions on trade with Iran due to its reliance
on business with the Islamic Republic and the Middle East.
"Most of Balli's business was done with Iran, so obviously
with the sanctions their ability to do business out of London
with Iran was dramatically reduced," a steel trader said.
Balli Steel had traded large volumes of iron ore and steel
products such as billet and hot-rolled coils. Platts cited
estimates from trading sources that it had handled up to 1
million metric tonnes per year of billet, much of it coming from
Sanctions have also pushed other steel firms such
ArcelorMittal Temirtau in Kazakhstan and Russia's
Metalloinvest, which used to sell a considerable amount of steel
to the Islamic Republic, to cut output in the past few years.
The collapse of U.S. steelmaker RG Steel, a large client for
Balli, was another blow for the UK trading firm, a second source
RG Steel filed for Chapter 11 bankruptcy protection last
May, saying it could not overcome the deterioration of the steel
Another factor that reduced Balli's cash flow was that it
had made a number of unsuccessful investments, including some in
iron ore, a second steel trader said.
As pressures on the company mounted, lenders started to
withdraw credit, pushing it over the edge, a third source said.
Balli's administrators - Neville Kahn, Phil Bowers and
Carlton Siddle of Deloitte LLP - are now assessing the financial
position of the firm and in due course will present their formal
proposals, Smithfield Group said on behalf of the
administrators. It declined to comment on the reasons for the
(Editing by Jane Baird)