Iran Sets Steel Sights High

EghtesadOnline: Iran aims to export 20 to 25 million tons of steel annually by 2025, it said in an official statement on Wednesday, up from a previous goal of 10 million tons.

News ID: ۷۷۴۰۱۸

18 February 2017

Tehran has sought to boost the steel sector, as it targeted economic expansion following the 2015 deal to limit Iran’s nuclear program and has worked to attract foreign investment, Reuters reported.

However, while it has succeeded in adding steel capacity, political and logistical hurdles are high and the lifting of sanctions has not opened up the country as quickly as first expected.

The Iranian Mines and Mining Industries Development and Renovation Organization, in a statement published on its website, quoted a member of the Expediency Council–a body that mediates between Iran’s Parliament and the Guardian Council–as saying Iran foresaw exports of 20-25 million tons of steel by 2025, according to Financial Tribune.

That compares with an export goal of 10 million tons outlined by Tehran before the nuclear deal. An overall target of 55 million tons per year for total Iranian steel production was unchanged in Wednesday’s statement, which followed a two-day steel conference in Tehran.

The global steel market is around 1.6 billion tons and analysts say there is little need for more capacity, given global oversupply for the foreseeable future.

Iran says its current production is around 1% of the world total–or 16 million tons.

The European steelmakers’ association Eurofer says Iran has increased exports of hot rolled flat steel rapidly to the European Union market and has accused Iran of “trade distorting measures”.

“The threat from Iran is new and it’s going to be one of the top three issues: China, India, Iran,” Karl Tachelet, external relations and trade director at Eurofer, said.

The EU is investigating the alleged dumping of hot-rolled steel by producers in Serbia and Iran as well as Brazil, Russia and Ukraine.

It has already imposed penalties on China, prompting an angry response and a WTO complaint from Beijing.

Eurofer says EU measures against China have helped revive an industry that was deeply in crisis in late 2015 and early 2016 when steel prices were very low.

Prices have since recovered, but industry officials say the market remains fragile and cannot cope with capacity increases, while politicians in Europe balk at capacity reductions.

“A European commodity steel business won’t be sustainable in the long term unless the external parameters (such as anti-dumping duties or capacity reductions) change,” Wolfgang Eder, CEO of Voestalpine, said on Wednesday.

Eurofer said on Thursday that Iranian exports to Europe had leapt over 1 million tons annually, putting the country just behind India at 1.9 million tons, while China shipped 5.7 million tons in 2016.

A European Commission source, who asked not to be named, said the EU executive has until April 7 to decide whether to impose anti-dumping penalties on Iran following an investigation into whether the country has been selling steel at below market prices.

Although they acknowledge Iran has expanded its steel industry, shipping sources say many firms are wary of trading with Iranian counterparts and western banks are unwilling to finance any trade for fear of US penalties.

Iran could also run short of iron ore given the complexity of trade with the nation and is considering export duties on iron ore to help maximize availability for its domestic steel mills, industry sources say.