Iran to Become Net Exporter of Aluminum From 2019

"In the short term, Iran will remain a net importer of metal," Amir Sabbagh added, noting that domestic production is around 340,000 tons per year.

"From a demand perspective, this will increase with the price of oil–on which the Iranian economy is heavily dependent–with Brent crude having increased 133% from the beginning of 2016 to its current level of around $63."

The IMIDRO official said the government has started many construction projects and with the price of oil going up, there is more money for investment, which is positive for aluminum consumption in Iran, Metal Bulletin reported.

"Despite this, by January 2019, the country will add 350,000 tons of new production capacity, so total production capacity will be closer to 800,000 tons, making Iran a net exporter of the metal," Financial Tribune quoted Sabbagh as saying.

This could create a bottleneck for the country. The impact is most likely to be felt in traditional countries of export for Iran, such as Turkey, although duty-unpaid units have found it difficult in recent years to compete with the duty-free units arriving in Turkey from Malaysia.

Metal Bulletin last assessed premiums in Turkey at $110-140 per ton on a CIF duty unpaid basis, although much of Turkey prefers to variable price using the Metal Bulletin Rotterdam duty-unpaid benchmark with a fixed upcharge.

South Aluminum Company or Salco is building a 300,000-ton/year unit in Asaluyeh, a natural gas hub in Bushehr Province, which is expected to start production in late 2018. The project is financed by China’s NFC, or China Nonferrous Metal Industry’s Foreign Engineering and Construction Company.

Iran has a current aluminum nameplate capacity of 457,000 tons/year, of which about 437,000 tons/year are operational.

The country does not have sufficient alumina production to meet the new plant’s demands, so again the Chinese are further involved in talks to build a new 2-million-ton per annum alumina refinery in Asaluyeh.

The refinery is to be fed by bauxite imported from Iran’s long-term supplier, Alumina Company of Guinea in Conakry, Guinea. Iran has an agreement to import 4 million tons/year of bauxite from Guinea until 2040.

"Going forward, Iran will remain a net exporter, eventually reaching a balance after five years between domestic production and demand. The country, however, is planning on increasing domestic production to 1.5 million tons over the next 15 years," Sabbagh added.

From an economic perspective, Iranian growth fluctuates based on the price of oil. In 2015, GDP growth declined by 1.5%, according to the latest World Bank figures. In 2017, however, the country is expecting to achieve 12.9% growth.

> Higher Exports, Price Disparity decried

Local downstream producers do not seem to be keen on Iran’s plans for increased aluminum exports, according to the latest remarks made by the head of Iranian Syndicate of Aluminum Industries.

The syndicate believes producers will have a hard time due to the current disparity between export and local prices.

“Downstream producers are forced to buy aluminum at high prices from local producers and produce materials that cannot compete with rivals in finished prices,” Houshang Goudarzi was also quoted as saying by Mehr News Agency.

According to the official, Turkey imports Iranian semi-finished aluminum at “very low prices” and in turn, exports high value-added finished products to Iran at a premium, which undercuts competition in Iran.

Goudarzi emphasized that price disparity, coupled with an acute raw material shortage, has caused a monopoly in the market.

"Iran exported 49,950 tons of aluminum ingots in the first six months of the current fiscal year (March 21-Sept. 22), while only 22,500 tons were offered in the local market," he said.

"Ingots are exported at 72,370 rials ($1.77) per kilogram and locally sold at 79,550 rials ($1.95)."

The industry official called for setting duties on aluminum exports, calling the current practice “subsidizing” rival countries.

Iran’s three major aluminum producers had an aggregate output of 166,520 tons of aluminum ingots in the six months to Sept. 22 to register a 4% decline year-on-year.

Iran Aluminum Company produced 84,238 tons, Hormozal Aluminum Company 52,193 tons and Almahdi Aluminum Company 30,089 tons.