Significant Decline in Iran's Apparent Steel Usage

EghtesadOnline: Iran's apparent steel usage, defined as production plus imports minus exports, sometimes also adjusted for changes in inventories, decreased significantly during the first five months of the current Iranian year (March 21-Aug. 22) compared with last year's corresponding period.

News ID: ۷۸۷۰۴۵

20 September 2021

According to the Iranian Steel Producers Association, apparent usage stood at 7.75 million tons for semi-finished products, registering a 24% decline compared with last year's corresponding period.

It stood at 6.46 million tons for finished products, posting a 19% year-on-year decrease.

Flat steel products accounted for the largest portion of finished steel consumption with 3.27 million tons, down 18% YOY.

Among flat steel products, hot-rolled coil had the biggest share of apparent usage with 3.07 million tons (down 20% YOY), followed by cold-rolled coil with 1.16 million tons (down 4% YOY) and coated coil with 553,000 tons (down 4% compared with the same period of last year).

Long steel products accounted for 3.19 million tons of finished steel apparent usage, down 21% YOY.

Rebar grabbed the biggest share in this section with 2.52 million tons, down 23% YOY, followed by beams with 409,000 tons (down 11% YOY) and L-beam, T-beam and other types with 267,000 tons (down 8% compared with the same period of last fiscal year).

As for semis, apparent usage of billet and bloom amounted to 4.45 million tons, down 24% compared with the same period of last year. The use of slab also decreased by 23% to 3.31 million tons during the first five months of the year.

DRI usage declined by 7% to 11.87 million tons, during the period under review.

The decline in apparent steel usage is the upshot of blackouts and power supply restrictions in the past few months.

In a letter to the Supreme National Security Council, the Iranian Steel Producers Association has put steel mills’ losses caused by power outages at $6 billion from the beginning of the current Iranian year (March 21) to Sept. 12.

According to ISPA, 82 complete days of production were lost during the period due to power outages and 300,000 direct and indirect jobs were lost or restricted, the news portal of the association (Steeliran.org) reported.

Summer demand led to severe power and water shortages in the past few months in most regions resulting in blackouts and dry taps.

Electricity consumption on June 20 surpassed 62,000 MW.

The new record came as high temperatures nationwide drove general electricity consumption to new heights, prompting authorities to prioritize domestic users over industries in supplying power.

As the manufacture of steel and cement is an energy-intensive process, it was restricted by the Iran Power Generation, Distribution and Transmission Company (locally known as Tavanir) and have been only allowed to work at a fraction of their capacity during specific hours.

The abrupt ban on the two key sectors created shortages of steel and cement in local markets and prices increased overnight, creating new problems for most construction sectors.

Rasoul Khalifeh-Soltani, the head of Iranian Steel Producers Association, said at the heat of the blackouts that the power outages shut down 85% of steel industry’s production.

Call for Supportive Measures

Underlining the hefty losses incurred by steelmakers, ISPA called for supportive measures to compensate at least part of the losses, including through a steady supply of gas for steel industry throughout autumn and winter, and the deferral of loan repayments, debts, bills and tax dues for at least six months.

Deputy Industries Minister Saeed Zarandi recently estimated the losses caused by power outages for steel mills (only those covered by the Iranian Mines and Mining Industries Development and Renovation Organization) to run at $235 million a week.

Iran is pursuing the target of becoming the world’s sixth biggest 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.

“To achieve the goal of 55 million tons per year of steel production capacity, we have a shortage of at least 5,000 megawatts of electricity,” the deputy minister was quoted as saying by Mehr News Agency.

Stressing that production conditions were satisfactory until the third month of the current fiscal year (June 22-July 22) before facing the challenges of electricity supply and power outages, Zarandi said, “In the past three months, due to the lack of electricity supply to production units, especially in the cement and steel sectors, we bumped into problems.”

Tavanir Spokesman Mostafa Rajabi Mashhadi said all power restrictions for industries will be removed by Sept. 23.

Appreciating the good cooperation of the steel industry this summer, he announced the end of electricity supply restrictions to the industry by that date.

“This summer, a series of challenges such as unprecedented drought made it difficult to provide sustainable electricity to all subscribers, so given the priority of electricity supply to households and the public sectors, we were forced to impose restrictions on the industrial sector,” he was quoted as saying by ISNA.

Noting that such restrictions are applied worldwide during peak consumption periods, Rajabi said, “In our country, there was no restriction on industrial consumption from 12:00-10:00 a.m.”

Output, Export, Import Data

According to the latest ISPA data, Iranian steelmakers produced a total of 10.83 million tons of semi-finished products during the first five months of the current fiscal year (March 21-Aug. 22), down 12% year-on-year.

Billet and bloom made up 6.49 million tons of total semi-finished production, down 15% YOY and 54% month-on-month.

Slab output reached 4.33 million tons to register a 9% and 42% decline YOY and MOM respectively.

The output of finished steel decreased by 11% YOY to 7.57 million tons.

Long steel products had a 4.29 million-ton share in the output of finished steel products, posting a 7% decline compared with the similar period of last year.

Rebar production stood at 3.52 million tons (down 7% YOY and 46% MOM) and was followed by beams with 454,000 tons (down 11% YOY, and 29% MOM) and L-beam, T-beam and other types with 324,000 tons (down 2% YOY and 43% MOM).

Production of flat steel with 3.27 million tons registered a 17% YOY decline in the five-month period.

Hot-rolled coil made up 3.23 million tons of the production in this category, showing a 15% and 28% YOY and MOM decline respectively, followed by cold-rolled coil with 1.02 million tons, down 10% and 12% YOY and MOM respectively, and coated coil with 618,000 unchanged from last year’s corresponding period but down 6% month-on-month.

Iran's output of direct reduced iron stood at 12.36 million tons during the period under review down 4% and 44% YOY and MOM respectively.

Despite the marked decline in production, the steelmakers have registered significant growth in exports.

A total of 3.08 million tons of semi-finished steel products were exported from Iran in the five months to Aug. 22, up 39% compared with the previous year’s similar period.

Billet and bloom had the lion’s share of semis exports with an aggregate of 2.05 million tons, 16% higher than the previous corresponding period.

Slab exports amounted to 1.03 million tons during the period, up 128% YOY.

Exports of finished steel products jumped by 88% to 1.39 million tons during the five months.

Rebar accounted for the largest portion of finished steel products exported from Iran during the period, with 1.01 million tons. The total volume of Iran’s rebar exports experienced a 99% growth compared with the same period of last year.

Beam exports amounted to 52,000 tons during the period, down 7% YOY.

About 72,000 tons of L-beam, T-beam and other types were also exported from Iran, recording a 26% rise YOY.

Hot-rolled coil exports amounted to 215,000 tons, registering a 162% growth compared with the year before.

Cold-rolled coil with 3,000 tons, registered an 81% decline YOY while coated coil with 47,000 tons, up 81% YOY, was the other finished steel products exported from Iran.

Exports of direct-reduced iron increased by 190% YOY to 490,000 tons, ISPA figures show.

Imports of finished steel increased by 1% YOY to 338,000 tons during the same period. The imports mostly included HRC with 58,000 tons, down 55%; CRC with 146,000 tons, up 62%; coated coil with 99,000, up 15%; L-beam, T-beam and other types with 15,000 tons, unchanged YOY; rebar with 13,000 tons, up 8% and beams with 7,000 tons, up 40%.

Imports of semi-finished steel made up 2,000 tons of the total import volume, down 33% YOY.

Iran imported 1,000 tons of billet and bloom during the period, down 50% YOY while slab imports stood at 1,000 tons, unchanged from last year's same period.