Apparent Steel Usage Dwindles

Apparent steel usage is defined as production plus imports minus exports, sometimes also adjusted for changes in inventories. 

The apparent usage totaled 8.01 million tons for finished products, posting a 16% decrease year-on-year, according to the Iranian Steel Producers Association.

Long steel products accounted for the largest portion of finished steel consumption with 4.05 million tons, down 16% YOY.

Rebar grabbed the biggest share in this section with 3.22 million tons, down 18% YOY, followed by beams with 507,000 tons (down 10% YOY) and L-beam, T-beam and other types with 323,000 tons (down 8% compared with the same period of last fiscal year).

Flat steel products accounted for 3.96 million tons of finished steel apparent usage, down 16% YOY. 

Among flat steel products, hot-rolled coil had the biggest share of apparent usage with 3.73 million tons (down 19% YOY), followed by cold-rolled coil with 1.39 million tons (down 4% YOY) and coated coil with 702,000 tons (down 2% compared with the same period of last year).

The apparent usage stood at 9.5 million tons for semi-finished products, registering a 24% decline compared with last year's corresponding period.

The apparent usage of billet and bloom amounted to 5.41 million tons, down 26% compared with the same period of last year. The use of slab also decreased by 21% to 4.09 million tons during the first six months of the year. 

DRI usage declined by 8% to 14.11 million tons, during the period under review.

 

 

Decline in Production Due to Power Restrictions

Iranian steelmakers registered a decline in production in H1 fiscal 2021-22.

According to ISPA, they produced a total of 12.99 million tons of semi-finished products during the period, registering a 14% decline compared with 15.03 million tons in last year’s corresponding period.

Billet and bloom made up 7.74 million tons of semi-finished production, down 17% YOY.

Slab output hit 5.26 million tons to register a 9% decline year-on-year.

The output of finished steel decreased by 10% YOY to 9.28 million tons.

Long steel products had a 5.31 million-ton share in the output of finished steel products, posting a 4% decline compared with the similar period of last year.

Rebar production stood at 4.36 million tons (down 4% YOY) and was followed by beams with 566,000 tons (down 10% YOY) and L-beam, T-beam and other types with 390,000 tons (down 1% YOY).

Production of flat steel with 3.97 million tons registered a 16% decline in the six-month period. 

Hot-rolled coil made up 3.91 million tons of the production in this category, showing a 15% decline compared with the similar period of last year, followed by cold-rolled coil with 1.22 million tons, down 11% compared with the same period of last year, and coated coil with 731,000 (down 5%).

Iran's output of direct reduced iron stood at 14.79 million tons, down 5% YOY, ISPA data show. 

The decline in production has to do with recent blackouts and power supply restrictions.

In a letter to the Supreme National Security Council, ISPA has put steel mills’ losses due to power outages at $6 billion from the beginning of the current Iranian year (March 21) to Sept. 22.

According to ISPA, 82 complete days of productions were lost during the period due to power outages and 300,000 direct and indirect jobs were lost or restricted, the news portal of the association reported.

Summer demand led to a severe power and water shortage in the past few months in most regions, which resulted in blackouts and dry taps.

Electricity consumption on June 20 surpassed 62,000 MW.

The new record came as high temperatures nationwide drove general electricity consumption to new heights, prompting authorities to prioritize domestic users over industries in supplying power.

As the manufacture of steel and cement is an energy-intensive process, these factories were restricted by the Iran Power Generation, Distribution and Transmission Company (locally known as Tavanir) and have been only allowed to work at a fraction of their capacity on specified period of the day.

The abrupt ban on the two key sectors created shortages of steel and cement in local markets and prices increased overnight, creating new problems for most construction sectors. 

Rasoul Khalifeh-Soltani, the head of Iranian Steel Producers Association, said at the heat of the blackouts that power outages shut down 85% of steel industry’s production.

Deputy Industries Minister Saeed Zarandi recently estimated the damage caused by power outages for steel mills (only those falling under the Iranian Mines and Mining Industries Development and Renovation Organization) to have run at $235 million a week.

Iran is pursuing the target of becoming 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.

“To achieve the goal of 55 million tons per year steel production capacity, we have a shortage of at least 5,000 megawatts of electricity,” Zarandi was quoted as saying by Mehr News Agency.

Noting that production conditions were satisfactory until the third month of the current fiscal year (June 22-July 22) before facing the challenges of electricity supply and power outages, Zarandi said, “In the past three months due to a lack of electricity supply to production units, especially in the cement and steel sectors, we bumped into problems.”

According to Tavanir Spokesman Mostafa Rajabi Mashhadi, all power restrictions for industries were removed as of Sept. 23.

Appreciating the cooperation of steel industry this summer, he announced the end of electricity supply restrictions on the industry by the date.

“This summer, a series of challenges such as unprecedented drought made it difficult to provide sustainable electricity to all subscribers, so given the priority of electricity supply to households and the public sectors, we were forced to impose restrictions on the industrial sector,” he was quoted as saying by ISNA.

 

 

Strong Growth in Exports

A total of 3.39 million tons of semi-finished products were exported in H1, registering a 36% growth compared with last year’s corresponding period.

Billet and bloom had the lion’s share of semis exports with an aggregate of 2.32 million tons, 17% higher than the previous corresponding period. 

Slab amounted to 1.17 million tons during the period, up 101% YOY.

Exports of finished steel products jumped by 69% to 1.62 million tons during the six months under review.

Long steel products had a 1.31 million-ton share in the export of finished steel products, posting a 71% growth compared with the similar period of last year.

Rebar accounted for the largest portion of finished steel products exported from Iran during the period, with 1.15 million tons. The total volume of Iran’s rebar exports experienced an 80% growth compared with the same period of last year.

Beam exports amounted to 68,000 tons during the period under review, unchanged year-on-year.

Nearly 92,000 tons of L-beam, T-beam and other types were also exported from Iran during the period, recording a 53% rise YOY.

The export of flat steel with 307,000 tons registered a 62% growth in the six-month period. 

Hot-rolled coil amounted to 237,000 tons, registering a 67% growth compared with the year before.

Cold-rolled coil with 10,000 tons, registered a 44% decline year-on-year.

Coated coil with 60,000 tons, up 100% YOY, was the other finished steel products exported from Iran.

Exports of direct-reduced iron increased by 287% YOY to 673,000 tons, ISPA figures show.

 

 

Imports

Imports of finished steel increased by 5% YOY to 412,000 tons and mostly included HRC with 62,000 tons, down 59%; CRC with 176,000 tons, up 87%; coated coil with 123,000, up 13%; L-beam, T-beam and other types with 25,000 tons, up 32%; rebar with 17,000 tons, up 31% and beam with 9,000 tons, up 50%.

Semi-finished steel imports made up 3,000 tons of the total import volume, unchanged YOY. 

Iran imported 1,000 tons of billet and bloom in the period, which stood at 2,000 tons in the same period of last year. Slab imports stood at 2,000 tons, which stood at 1,000 tons in last year’s corresponding period.