Iran Steel Output Down 8.6%

EghtesadOnline: Iranian steel mills produced a total of 19.3 million tons of crude steel in the first nine months of 2021, which indicate an 8.6% decline compared with the corresponding period of 2020.

News ID: ۷۸۷۲۳۳

31 October 2021

As per the latest report released by the World Steel Association, Iran's September output amounted to 1.3 million tons, down 51.4% year-on-year.

Despite the decline in output, Iran maintained its global status as the world’s 10th biggest crude steel producer. China was the world’s largest crude steel producer in the nine-month period with 805.9 million tons of steel output, up 2% YOY.

It was followed by India with 87.3 million tons (up 23.3%), Japan with 72.1 million tons (up 17.9%), the United States with 64.4 million tons (up 19.8%), Russia with 56.4 million tons (up 6.2%), South Korea with 52.9 million tons (up 6.7%), Germany with 29.9 million tons (up 16.1%) and Turkey with 29.9 million tons (up 15%).

Iran is placed after Brazil (ninth) with 27.2 million tons.

The world’s 64 steelmakers produced 1.46 billion tons of steel over the nine months under review, up 7.8% YOY. States located in Asia and Oceania collectively produced 1.07 million tons of the total.

The Middle East produced 28.9 million tons of crude steel in the nine months under review, posting a decrease of 3% compared with the same period of last year.

Global steel output also experienced an 8.9% decline in September to 144.4 million tons.

Crude steel is defined as steel in its first solid (or usable) form: ingots and semi-finished products (billets, blooms and slabs). This is not to be confused with liquid steel, which is steel poured.

The World Steel Association is one of the largest and most dynamic industry associations in the world, with members in every major steel-producing country. Worldsteel represents steel producers, national and regional steel industry associations and steel research institutes. Members represent around 85% of global steel production.

The 64 countries included in this table represent 85% of global steel production.

Iranian steel mills produced a total of 29.02 million tons of crude steel in 2020, which indicate a 13.35% rise compared with 2019, the highest growth in output in the list of the world's top 10 producers.

Located in southwestern Isfahan, Mobarakeh Steel Company is the biggest steel producer in Iran and the Middle East and North Africa region.

Output Hit by Power Restrictions

The decline in production has to do with blackouts and power supply restrictions of the past few months.

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

According to ISPA, 82 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 reported.

Summer demand led to a severe power and water shortage in most regions, which resulted in blackouts and dry taps.

Electricity consumption on June 20 surpassed 62,000 MW.

The 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, their factories were subsequently 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 power outages shut down 85% of steel industry’s production.

Deputy Industries Minister Saeed Zarandi recently estimated losses inflicted by power outages on steel mills (only those falling under the Iranian Mines and Mining Industries Development and Renovation Organization) to have reached $235 million a week.

Iran is 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.

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

Noting that production conditions were satisfactory before facing the challenges of electricity supply and power outages, Zarandi said, “In the past three months, due to a lack of electricity supply to production units, especially in the cement and steel sector, we bumped into problems.”

According to Tavanir Spokesman Mostafa Rajabi Mashhadi, all power restrictions for industries were removed as of 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.