Iran Steel Heavyweights' Exports Down 44% to 1.28m Tons

EghtesadOnline: Iranian heavyweight steel producers exported a total of 1.28 million tons of finished and semi-finished steel products, including beam, rebar, ingot, slab, hot and cold-rolled coils, and coated coils, during the first four months of the current Iranian year (March 20-July 21) to register a 44% decline compared with last year’s corresponding period.

News ID: ۷۵۰۶۸۱

12 August 2020

The mills experienced a year-on-year decline of 29% in exports during the fourth month of the fiscal year (June 21-July 21) to 451,280 tons, latest data released by the Iranian Mines and Mining Industries Development and Renovation Organization show.

With 404,507 tons of exports during the four-month period (down 43% YOY), Khouzestan Steel Company was Iran's biggest exporter. The company exported 132,148 tons of steel in the month to July 21, to register a year-on-year decline of 19%.

Esfahan Steel Company (ESCO) was the second biggest exporter during the four-month period, as it shipped out 282,999 tons of products, down 22% compared with last year's corresponding period.

However, ESCO experienced a 4% YOY growth to 102,418 tons during the fourth month under review.

Mobarakeh Steel Company ranked third as it exported 127,930 tons during the four months, down 75% compared with last year's corresponding period. The mill’s exports in the month to July 21 amounted to 64,930 tons, down 59% YOY.

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

During the period under review, Hormozgan Steel Company exported 148,077 tons of slabs, down 35% YOY. The mill exported 34,967 tons of the product in the fourth month to register a 10% growth YOY.

Khorasan Steel Company came next with 29,998 tons of bloom in the four months, down 66% YOY. The company also shipped out 319 tons of rebar, plunging by 93% YOY.

The IMIDRO report only takes into account the output of large-scale producers. A more comprehensive report, which includes exports of smaller scale steelmakers, will be published in the coming days.

More than 10.36 million tons of finished and semi-finished steel products were exported from Iran in the last Iranian year (ended March 19, 2020) to register a 22.21% YOY increase.

Semi-finished steel made up 6.9 million tons or more than 66.66% of the total export volume, up 26% YOY.

Billet and bloom had the lion’s share of semis exports with a total of 4.83 million tons to mark a 24% YOY rise. Slab followed with 2.07 million tons, up 31% YOY.

Exports of finished steel products increased by 16% YOY to reach 3.45 million tons.

According to World Steel Association's latest data, Iran is currently the 10th biggest steel producer in the world, as it produced a total of about 13.89 million tons of crude steel during the first half of 2020, up 10.2% compared with the corresponding period of 2019.

The country's June output stood at 2.43 million tons to witness a year-on-year growth of 5.3%, according to the Brussels-based international trade body for the iron and steel industry.

Iran’s crude steel output stood at 31.9 million tons in 2019, according to Worldsteel, up 30.1% YOY.

Iran is aggressively 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.

The country’s current steel production capacity stands at over 37.5 million tons per year.

The country’s steel production capacity is expected to reach 43.6 million tons by the end of the current Iranian year (March 20, 2021), while the actual production is estimated to hit 31.1 million tons to utilize 71% of the nominal capacity, according to IMIDRO.

US Sanctions

The US has broadened the scope of its sanctions on steel, stainless steel, aluminum and copper trade with Iran to stop imports into the country of specialized metals that it says could be used in Iran's nuclear, ballistic missile and military programs, S&P Global Platts reported.

Most of the products had already been targeted by secondary sanctions against Iran, previously published by the US. The latest list gives more detailed descriptions of some of the products previously included in more general categories.

US Secretary of State Mike Pompeo late July 30 announced the US State Department has identified 22 specific materials that it alleges are used in connection with Iran's nuclear, military, or ballistic missile programs.

"Those who knowingly transfer such materials to Iran are now sanctionable pursuant to Section 1245 of the Iranian Freedom and Counter-Proliferation Act," Pompeo said in a statement.

The sanctions also cover trade in graphite and raw or semi-finished metals that may be used in Iran's construction sector, which according to the US is controlled by the Islamic Revolution Guards Corps.

"The IRGC's construction firm and many of its subsidiaries remain sanctioned by the United Nations because they were directly involved in the construction of the uranium enrichment site at Fordow," Pompeo said.

The 22 products included on the new sanctions list, deemed to be used in connection with Iran's nuclear, military, or ballistic missile programs, are: aluminum 319, 1100, 225, 6061, 6063, 6082 and 7075; aluminum bronze alloy UNS C63600 (CDA alloy 636); aluminum oxide (Al2O3); steel 302, 4130; stainless steel 321 and 316; A877 steel and A228 steel,100Cr6-52100 steel, 350 maraging steel (also known as maraging steel350); 300 maraging steel (also known as maraging steel300); UNS Cl7200-TDO1 (beryllium copper); UNS C37000–CuZn38Pb1; tungsten copper and aluminum powder with purity above 98%.

An informed Iranian observer told S&P Global Platts that "the new sanctions are not taken very seriously because all of the metals were previously under the OFAC [Office of Foreign Assets Control] sanctions".

Supply and trade of steel, aluminum, graphite and coal with Iran have been restricted by US secondary sanctions from August 2019 but Iran's metals and minerals export trade has continued since then. In fact, its steel exports have increased as they are competitive.

Secondary sanctions mean that any third parties involved in that trade are subject to US sanctions.

No information was given on who the current suppliers of these products to Iran are, and the Iranian observer consulted said he was unable to specify origins, as this is classified information within Iran.

Following the previous imposition of secondary metals trade sanctions, the US stepped up its sanctions on Iran in the steel area in January 2020, imposing sanctions on exports from most of Iran's steelmakers and international steel traders that have links to Iran.

Iranian sources said at the time that Iran's steel and metals trade had carried on largely as normal in spite of both of these sets of sanctions, as much of the metals trade with Iran is with Chinese, other Asian and Middle Eastern parties that have not considered the US sanctions to be applicable to their activities.

Much international metals trade with Iran is channeled and paid for via traders in offshore locations, such as Dubai, the UAE, with those involved reportedly often turning a blind eye to details on suppliers and end-customers, so long as the product is of acceptable quality and price.