Iron Ore Policy to Boost Steel Exports

EghtesadOnline: After a year of back and forth between government officials and industry players, no changes were made in export duties for iron ore despite previous announcements.

News ID: ۷۴۱۰۵۶

19 April 2017

The government’s U-turn seems to be mostly due to the pressure exerted by European Steel Association’s dumping allegations against the Iranian steel industry.

The European Commission recently decided not to impose preliminary anti-dumping duties on steel imports from five countries, including Iran, EC’s spokesman told Metal Bulletin on April 10.

The commission had sent official papers on the issue to the parties involved on April 4, according to Financial Tribune.

The EU steel lobby group said back in February that Iranian steel imports pose the latest threat to European steelmakers after imports from Iran, especially hot-rolled coil shipments, grew by nearly eightfold between 2013 and 2016.

The Iranian government had planned to slap 5-15% stepwise duties over a three-year period on the export of unprocessed minerals, including iron ore, as of this fiscal year (started March 21). This would have made procurement of cheap feedstock for Iranian steelmakers easier. Eurofer, which represents an industry that has to import iron ore, said such a practice amounts to protectionism.

Industry experts had earlier warned that fiddling with iron ore export duties could have undesirable consequences.

“Any direct governmental support of the steel industry can be potentially regarded by international players as subsidizing the sector. And in a free market economy, this is seen as a form of rent-seeking,” Bahador Ahramian, a member of Iran Steel Producers and Exporters Association, told Financial Tribune on phone in February.

The official emphasized that Iran’s domestic trade policies must be devised with an eye to their impact on exports.

This turn of events could not have come at a better time, as Iran is in need of further boosting exports and keeping its export destinations.

Major Iranian steelmakers produced 14.46 million tons of crude steel in the last fiscal year (March 2016-17), indicating a 4.58% growth compared to the year before. Exports for the period stood at 5.38 million tons, up 29%.

This is while local steel consumption for the 11 months of last year ending February 18 has seen a downward trend, according to Iran Steel Producers Association.

The necessity of maintaining exports intensifies further, considering the government’s expansion plans for the industry.

Iran aims to become the world’s sixth largest steel producer as per the 20-Year Vision Plan (2005-25), which envisions an annual production of 55 million tons of crude steel and 20-25 million tons of exports per year by the deadline.

Minister of Industries, Mining and Trade Mohammad Reza Nematzadeh had said that Iranian mills have so far materialized 31 million tons of the annual steel manufacture capacity target.