Iran's Top Steelmakers’ Exports Up 6 Percent

EghtesadOnline: Major Iranian steelmakers exported 420,944 tons of semi-finished and finished steel products during the first month of the current fiscal year (March 21-April 20) to register a 6% growth year-on-year.

News ID: ۷۴۵۲۹۳

13 May 2018

The data released by Iranian Mines and Mining Industries Development and Renovation Organization are preliminary figures presented by IMIDRO on Iran’s top-scale producers and lack details on most private producers’ shipments.

A more complete picture is usually published by Iran Steel Producers Association within a few weeks.

Khouzestan Steel Tops Charts

Khouzestan Steel Company exported 131,812 tons of slab, bloom and billet last month, registering a 21% drop YOY, to remain the biggest Iranian steel exporter, Financial Tribune reported.

Bloom exports had the lion’s share of KSC’s exports with 69,025 tons, going down 14% YOY. Billet exports came next with 59,793 tons, up 166%, followed by slabs with 2,994 tons, down 95% YOY.

The steelmaker, located in the southwestern Khuzestan Province, exports to over a dozen countries. About half of the exports goes to the Middle East and North Africa region. Other major export destinations are located in the Far East and Americas.

KSC exported a record high of 2.76 million tons in the last fiscal year (March 2017-18), growing 34% YOY.

ESCO 2nd Despite Slow Start

Esfahan Steel Company was the second biggest exporter during the month with 55,808 tons of beam, rebar, coils and other products shipped overseas, down 11% YOY.

Rebar made up 10,145 tons of ESCO’s overall exports, dropping 37% YOY. It was followed by beam and coil with 5,025 tons and 1,990 tons respectively. Beam shipments were down 49% YOY, while coil exports grew 51%. Steel products listed as “others” made up 38,648 tons of all the exports, up 10% YOY.

ESCO ended last year with an 80% uptick in exports to 1.15 million tons, making it the third largest exporter.

MSC Boosts Flat Shipments

Mobarakeh Steel Company, despite a promising growth in flat steel shipments, ranked third in exports.

MSC shipped 38,782 tons of hot- and cold-rolled, acid-washed, tin-plated, coated, checkered and galvanized flat steel during the month, indicating an overall YOY drop of 23%.

Hot-rolled coil shipments had the highest YOY growth with 433% to reach 21,121 tons. Coated coil was next with a 202% uptick to 142 tons.

The giant steelmaker was last year’s second largest exporter with 1.29 million tons, down 16% compared to the year before last.

Together with its subsidiaries, Mobarakeh Steel is the largest flat producer in the Middle East and North Africa region, accounting for 1% of Iran’s GDP.

Other Producers

South Kaveh Steel Company came next with 127,000 tons of billets to post a 323% YOY surge in shipments and keep a healthy lead over other rivals.

Hormozgan Steel Company followed with 44,744 tons of slabs shipped, down 14% YOY.

Other producers’ exports were less than 10,000 tons for the period.

Khorasan Steel Company was next with 7,347 tons of rebar exported, down 40% YOY.

Iran Alloy Steel Company followed with 4,108 tons of rebar shipments, dipping 81% YOY.

Khouzestan Oxin Steel Company was next with 1,343 tons of plates, down 1% YOY.

US Sanctions Renewal

Iran since 2015 has pushed forward with a national steel industry development policy that envisages a near-doubling of capacity to 55 million tons by 2025, from a current nominal capacity of 32 million tons/year.

US President Donald Trump’s announcement on Tuesday that the US government will institute “the highest level of economic sanctions” against Iran as the United States walks away from the nuclear deal is more likely to slow Iran’s steel capacity expansion program than to curb its steel and iron ore exports, S&P Global Platts reported.

European plantmakers, including SMS, Danieli, Sarralle, Outotec and voestalpine, have boosted their involvement in new and expanding Iranian steel production projects since the Joint Comprehensive Plan of Action, the formal name of the nuclear accord, became effective early 2016.

New mill projects or those underway are now expected to be seriously hit by financing difficulties stemming from a renewal of US sanctions. Sources said many had already grounded to a halt amid uncertainties over US policy. Financing has always been challenging for these projects in which only banks with no US connections have been able to participate.

Iran is expected to turn increasingly to Chinese technology for steel and metal development projects, if it is unable to work with the Europeans.

Domestic Slump Turns Iran Into Major Exporter

Iran has become a significant steel exporter in recent years, as its domestic market growth has been insufficient to absorb its steel output growth.

Total exports of steel and direct reduced iron, a steelmaking raw material, exceeded a record 9 million tons in the last fiscal year (ended March 20, 2018), according to the Iranian Steel Producers Association.

Of this amount, exports of semi-finished steel products such as billets and slabs accounted for 6.87 million tons, a jump of 84% on the previous year.

Iran intends to increase its total steel and DRI exports to 12-13 million tons in the current Iranian year, ending March 20, 2019, ISPA said.

Crude steel output is planned to increase to 26 million tons this year from 21 million tons last year.

Iran does not export steel to the US. Its steel exports are destined mainly for Asian countries, including Thailand, Taiwan, Indonesia and Philippines, as well as Middle East states such as Oman and European countries like Spain and Italy.

Iranian exporters do not typically use letters of credit and their steel export trade, developed via traders without US links, is therefore not expected to be greatly impacted by the renewal of US sanctions, trading sources said.

The country’s steel exports are considered competitive due to the devaluation of the Iranian rial, which has lost around 50% of its value over the past year.

Its exports of iron ore have dwindled in recent years due to the need to keep more at home to feed the nation’s growing steel production.

Iran exported some 18 million tons of iron ore in the last fiscal year, down from a peak of 25 million tons/year several years ago.

As virtually all of Iran’s iron ore exports are destined for China, this trade is not expected to suffer any immediate impact from US sanctions.