Iran Steel Exports Decline in Wake of Sanctions

EghtesadOnline: Major Iranian steelmakers exported 5.08 million tons of steel during the 11 months to Feb. 19 to register a year-on-year decline of 22%, latest data released by the Iranian Mines and Mining Industries Development and Renovation Organization show.

News ID: ۷۴۶۸۹۷

11 March 2019

The steel mills shipped 373,888 tons during the 11th month of the year (Jan. 21-Feb. 19), which shows a 51% decline compared with the same month of the year before.

KSC Comes First

With a total of more than 1.99 million tons of exports over the 11 months and 159,387 tons in the 11th month under review, Khouzestan Steel Company was Iran's biggest exporter of steel.

Nonetheless, the mill experienced a decline in exports both during the 11 months and in the 11th month, according to Financial Tribune.

KSC exported 847,951 tons of bloom and 454,532 tons of billet during the 11 months—down 19% and 37% respectively YOY. The company’s exports of slabs witnessed 4% year-on-year decrease to 697,047 tons. KSC saw an overall 20% YOY decline in total exports over the 10 months.

All of KSC's exported products, except for bloom, declined during the 11th month. The company exported 114,373 tons of bloom, up 35% YOY, 15,677 tons of billet, down 69% YOY, and 29,337 tons of slabs, down 80% YOY over the month to Feb. 19. KSC saw an overall 43% YOY decline in total exports during the month (159,387 tons).

With a total of 1.99 million tons, Khouzestan Steel Company was Iran's biggest exporter of steel during the 11 months to Feb. 19

The steelmaker, located in the southwestern Khuzestan Province, exports to over a dozen countries.

About half of KSC's exports goes to the Middle East and North Africa region. Its other major export destinations are located in the Far East and Americas.

Largest Steelmaker at Second Spot

Mobarakeh Steel Company, located in Isfahan, exported 783,684 tons of products during the 11 months to register a 25% decrease YOY.

The company is the largest steelmaker in the Middle East and North Africa, and one of the largest industrial complexes operating in Iran.

During the 11th month, MSC joined all other steel heavyweights in Iran in registering a decline. It shipped out 27,739 tons abroad, which saw an 84% decline YOY.

Almost all exported products experienced a decline during the month under review.

ESCO Posts Growth in Rebar Exports

Esfahan Steel Company (ESCO) exported 810,601 tons during the 11 months, down 21% YOY.

The company registered a YOY growth in rebar. The 142,043 tons of rebar that the mill exported saw an increase of 10% YOY.

The major Iranian steel exporter shipped 85,242 tons of beams, down 5% YOY, and 33,735 tons of coils, down 43%. Its ingot exports stood at 549,578 tons, unchanged compared with last year's corresponding period.

During the month (Jan. 21-Feb. 19), ESCO exported 71,733 tons to register a year-on-year fall of 32%.

The company saw a fall in monthly exports across almost all categories of its products, except for rebar. ESCO shipped out 511 tons of beam during the 11th month, registering a YOY decline of 85%. It exported 16,108 tons of rebar, up 29% YOY, while its coil exports amounted to 3,756 to go down 35% YOY.

The export of ingots stood at 51,358 tons, remaining unchanged YOY.

Other Producers

During the 11 months of the current Iranian year, all other producers, including Hormozgan Steel Company and Khorasan Steel Company, registered downturns.

The former exported 582,126 tons of slab, down 42% YOY while the latter exported 56,751 tons of rebar, which was down 50% YOY.

Khuzestan Oxin Steel Company shipped 14,328 tons of steel sheets, down 36% YOY. This is while Iran Alloy Steel Company exported 38,977 tons of rebar, marking a decline of 38% YOY.

South Kaveh Steel Company also shipped out 622,000 tons of billet, indicating a 12% decline YOY.

From the 11th-month perspective, all other producers also witnessed year-on-year declines in exports. The highest decline was registered by Iran Alloy Steel Company, as the company exported 146 tons of rebar during the month, down 97% YOY.

Khuzestan Oxin Steel Company and Khorasan Steel Company also registered a huge year-on-year decline in sheet exports (at 988 tons, down 86%) and rebar exports (at 1,100 tons, down 77%) respectively.

According to World Steel Association, Iranian steel mills produced a total of 25 million tons of crude steel in 2018, up 17.7% compared with 2017. As such, the country was ranked the world’s 10th biggest producer of steel last year, placed between Brazil (ninth) with 34.73 million tons and Italy (11th) with 24.47 million tons.

Iran is aggressively pursuing the target of becoming the world’s sixth largest steel producer as per the 20-Year Vision Plan, which targets an 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.

Impact of US Sanctions

Iran's steel exports, among other commodities for that matter, have come under immense pressure after the imposition of US sanctions last year.

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 now largely directed at the country’s oil industry and banking system, it is still expected to aggravate the situation in the Iranian export steel market, which had already been struck by the 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 deals 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 to compensate for the risks involved in trading with the country.

According to Deputy Minister of Industries, Mining and Trade, and Chairman of Iranian Mines & Mining Industries Development & Renovation Khodadad Gharibpour, Iranian steel industry is an export-oriented one in that the country exports more than 40% of its steel production.

"I think that’s the key question for every Iranian steel producer because export is one of the most important ratios in their production because on the one hand, consumption within Iran is not growing fast enough to feed all the nominal capacities coming up and on the other hand you have not only sanctions from the US, you also have anti-dumping," Joachim Schroder, chairman of RCG Research & Consulting Group AG, told Financial Tribune in an interview on the sidelines of the opening of the ninth edition of "Iranian Steel Market Conference", also known as ISMC 2019.

The European Union announced definitive anti-dumping duties on the import of hot-rolled coil from Iran and three other countries in October 2017.

"I think there are two solutions. There are still markets in Africa and Southeast Asia, which have insufficient domestic production so there are some selective markets still open. That’s one way and the other way I think is to look for cooperation because the big asset of Iranian steel industries that are together with CRS (cold-roll sheet) producers," Schroder said.

"They have the cheapest production cost and that is something where you can probably develop your business model; say you ship semi products like slabs or billets and then you cooperate very close with steelmakers because most of the countries don’t put any anti-dumping on semi products so that is a, not today or tomorrow, but that is a long-term strategy I would suggest for the big players in the market."

The two-day "ISMC 2019" concluded on Jan. 30. It gathered hundreds of people, including steel and mining industry veterans and government officials.

The annual event, a brainchild of Donya-e-Eqtesad Media Group, the parent company of Financial Tribune, is organized to discuss challenges and opportunities facing Iran's steel industry. This year, perhaps, the challenging part has grabbed more attention amid the new round of US sanctions imposed against the Islamic Republic with the aim of restricting Iran's trade with the world.