Iranian Steel Market Conference Gathers Hundreds in Tehran

Notable figures addressing the first day of the conference included Donya-e-Eqtesad Media Group's CEO Alireza Bakhtiari; CEO of Research Consulting Group Joachim Schroder; Deputy Minister of Industries, Mining and Trade and Chairman of the Board of Iranian Mines & Mining Industries Development & Renovation (IMIDRO) Khodadad Gharibpour, Deputy Industries Minister Jafar Sarqeyni; Dennis Matos from Sarralle Group and a representative of Metal Export, Oksana Golovko, among many others.

 

 

Sanctions Under Spotlight

The annual event is organized to discuss challenges and opportunities facing Iran's steel industry. This year, perhaps, the challenging part has grabbed more attention amid US sanctions reimposed to restrict Iran's trade with the world.

"Unfair US sanctions will do a number on the export of Iranian products, especially steel, and it is predicted to face serious hurdles. Hence, Iranian steel industry players gathered their focus on ‘exports’ in this year’s edition of the conference to discuss everything related to exports, including domestic problems, regulations, customs regulations, infrastructures, international hurdles and interaction with creditable international companies," Bakhtiari said in an address to the conference.

UK-based analysts in Fastmarkets say the new round of US sanctions against Iran are expected to cut Iranian steel exports, gradually leading to lower Iranian steel output.

Although the move is largely directed at the country’s oil and banking industries, it is still expected to aggravate the Iranian export steel market, which had already been struck by a previous set of sanctions imposed by US President Donald Trump’s administration in early August.

The latest round of sanctions was enforced in November.

Trump announced his decision to pull out of the nuclear deal Iran signed with world powers, including the United States, in May.

Shipping problems are said to be a major issue at present.

Under the circumstances, Iranian steel exporters have had to cut prices significantly to attract customers and compensate for the risks involved in trading with the country.

 

 

World's Major Steelmaker 

According to World Steel Association, Iran is the world's 10th biggest steel producer.

The Brussels-based international trade body for the iron and steel industry said in its latest report that Iranian steel mills produced a total of about 25 million tons of crude steel in 2018, up 17.7% compared with 2017.

Iran’s December steel output grew 14.1% year-on-year to hit 2.26 million tons.

The country is placed between Brazil (ninth) with 34.73 million tons and Italy (11th) with 24.47 million tons.

This is while the world’s 64 steelmakers produced a total of 1.78 billion tons of steel over 2018, up 4.5% YOY.

Global steel output stood at 147.1 million tons in December, indicating a 4.2% increase YOY.

China was the world’s largest with 928.26 million tons of steel output, up 6.6% YOY. Chinese steel production hit 76.12 million tons in November to rise 8.2% YOY.

Notably, the Worldsteel report shows Iran was the second biggest producer of direct-reduced iron with 2.3 million tons of DRI production in December and 25.54 million tons in 2018.

India, Iran's primary rival in DRI output, increased its 2018 production by 2.9% YOY to 30.36 million tons.

Global direct-reduced iron output increased 6.2% year-on-year to 7.12 million tons in December.

Production in 2018 grew 11.6% year-over-year to 84.12 million tons.

 

 

Significance of Export in Realization of Targets

Iran aims to become the world’s sixth largest steel producer as per the 20-Year Vision Plan, which targets annual production capacity expansion to 55 million tons and 20-25 million tons of exports per year by 2025. Iranian steel mills have so far realized just over 30 million tons of the capacity target.

"Based on the Comprehensive Steel Plan, around 35 million tons of the 55 million tons of steel production should be consumed domestically and the rest, 20 million tons, are to be exported. Latest statistics indicate that domestic consumption will be between 25 and 27.5 million tons by 2025. If the 55-million-ton target is realized, there will be a domestic consumption surplus of about 27.5 million tons, which should be exported," Bakhtiari said.

"The important thing is that reaching the production goals depends on exports; without exports, competitiveness will gradually diminish in this industry," he added.

Iran's latest export data show 5.82 million tons of finished and semi-finished steel products were exported from Iran during the nine months of the current fiscal year (March 21-Dec. 21, 2018) to register a 2.36% year-on-year growth.

According to the Iranian Steel Producers Association's latest report, semi-finished steel made up 3.67 million tons or more than 63.11% of the total export volume, down 20% YOY.

Billet and bloom had the lion’s share of semis exports, with an aggregate of 2.29 million tons to mark an 11% YOY decline. Slab followed with 1.37 million tons, down 32% YOY.

However, exports of finished steel products surged 100% YOY to reach 2.14 million tons. Rebar was the main exported finished product with 1.13 million tons, registering a 185% jump YOY.

Following rebar were hot-rolled coil with 528,000 tons, up 20% YOY; beams with 196,000 tons, up 52% YOY; “other steel products” with 140,000 tons, up 150% YOY; coated coil with 125,000 tons, up 178% YOY; and cold-rolled coil with 27,000 tons, up 238% YOY.

"Iranian steel industry is an export-oriented industry in that, as the foreign trade figures show, Iran exports more than 40% of its steel production. That’s why the topic of exports is of high significance for Iran's steel industry," Khodadad Gharibpour told the conference.  

According to ISPA, Iran's apparent steel usage—defined as production plus imports minus exports, sometimes also adjusted for changes in inventories—stood at 15.06 million tons for semis, growing 31%; and hit 14.51 million for finished products to drop 5% YOY.

Hot-rolled coil had the lion’s share of finished steel consumption as it reached 5.71 million tons, down 5% YOY. It was followed by rebar with 4.55 million tons, up 7% YOY; cold-rolled coil with 2.1 million tons, down 7% YOY; coated coil with 1.12 million tons, down 19% YOY; beams with 545,000 tons, down 18% YOY; and "other steel products" with 462,000 tons, down 27%.

As for semis, the usage of billet and bloom grew 37% to 8.19 million tons, while that of slab rose 24% to 6.86 million tons. 

 

 

Aggressive Expansion Plans

Referring to IMIDRO's aggressive expansion plans in the steel industry and the subsequent creation of a high number of jobs, Gharibpour said that in the current fiscal year, IMIDRO has implemented eight plans with a value of $1.2 billion and expects 3,000 jobs to be created by the yearend (March 20, 2019) with the implementation of upcoming plans.

In other words, a total of 6,000 jobs will have been created by the fiscal yearend in the mining sector and mining industries. Over 700,000 people are working in this sector.

Two big steel plants, a direct reduction iron and a steel pelletizing plant, were officially inaugurated by Iranian First Vice President Es'haq Jahangiri in the southeastern province of Kerman earlier in 2018.

The two plants, built with more than half a billion dollars of investment, will add 1 million tons of DRI, also known as sponge iron, and 2.5 million tons of iron ore pellets to Iran’s burgeoning steel production.

The first plant commissioned on Tuesday was the Butia Pelletizing Plant near the city of Kerman, which has been producing pellets on a trial basis since April.

Jahangiri then traveled to Bardsir to open a 1-million-ton DRI plant for the production of billets and blooms.

The construction of Bardsir Steel Plant with an investment of $357 million marked the application of localized technology in design, installation and commissioning of a 140-ton electric arc furnace as well as ladle furnace and a continuous casting machine.

The keynote speakers on day 1 were unanimous in that sanctions will have a notable impact on Iran's steel exports, yet they remained hopeful that years of experience gained by the Islamic Republic under past sanctions will help the country weather the storm. 

"I think that the effective organizational processes are extremely relevant for being successful in export markets. But I’ve seen the enthusiasm and also the skills of Iranian steelmakers. I’m very positive that you can manage these challenges and you have shown already in the past that you have been very successful in managing this and I wish everybody here all the best in executing your steel strategy," said Joachim Schroder.