Crude Steel Production Capacity Tops 40m tons

EghtesadOnline: The installed capacity of crude steel production in Iran has exceeded 40 million tons per year, according to the deputy industries minister.

News ID: ۷۸۷۲۷۱

08 November 2021

“The annual production of steel ingots has exceeded 30 million tons,” Vajihollah Jafari was also quoted as saying by IRNA during the Eighth Steelprice Conference held recently.

“The domestic steel industry’s installed capacity includes 36 million tons of direct reduced iron [DRI], 66.7 million tons of pellets and 62.7 million tons of [iron ore] concentrate, but at the same time we are facing problems in supplying raw materials,” he said.

“The target capacity of 55 million tons of steel ingots is expected to be achieved in the fiscal 2025-26, of which 40 million tons have been realized so far and another seven million tons will be added in the current year [fiscal 2021-22].”

The official noted that $21.5 billion have been invested in the steel industry, of which $19 billion have been installed.

“The required electricity for steel industry is 8,000-9,000 megawatts, of which 6,000 megawatts are currently in use and an additional 12,500 megawatts are required,” he said, adding that gas is also required in the steel industry as feedstock.

World’s 10th Biggest Steelmaker

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.

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 ranking 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 a total of 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 reach 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 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 complete days of productions 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 severe power and water shortage in the past 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 electricity consumption to new heights, prompting authorities to prioritize domestic users over industries in supplying power.

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

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.

Deputy Industries Minister Saeed Zarandi recently estimated the losses caused by power outages for steel mills (only those falling under the Iranian Mines and Mining Industries Development and Renovation Organization) to have run at $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 goal of 55 million tons per year 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.

Noting 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 a lack of electricity supply to production units, especially in cement and steel sectors, we bumped into problem.”

According to Tavanir Spokesman Mostafa Rajabi Mashhadi, all power restrictions for industries were removed as of Sept. 23.

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

Strong Growth in Exports

A total of 3.39 million tons of semi-finished products were exported during the first six months of the current Iranian year (March 21-Sept. 22), registering a 36% growth compared with last year’s corresponding period.

Latest data release by the Iranian Steel Producers Association show billet and bloom had the lion’s share of semis exports with an aggregate of 2.32 million tons, 17% higher than the previous corresponding period.

Slab amounted to 1.17 million tons during the period, up 101% YOY.

Exports of finished steel products jumped by 69% to 1.62 million tons during the six months under review.

Long steel products had a 1.31 million-ton share in the export of finished steel products, posting a 71% growth compared with the similar period of last year.

Rebar accounted for the largest portion of finished steel products exported from Iran during the period, with 1.15 million tons. The total volume of Iran’s rebar exports experienced an 80% growth compared with the same period of last year.

Beam exports amounted to 68,000 tons during the period, unchanged year-on-year.

Nearly 92,000 tons of L-beam, T-beam and other types were also exported from Iran during the period, recording a 53% rise YOY.

Export of flat steel with 307,000 tons registered a 62% growth in the six-month period.

Hot-rolled coil amounted to 237,000 tons, registering a 67% growth compared with the year before.

Cold-rolled coil with 10,000 tons registered a 44% decline year-on-year.

Coated coil with 60,000 tons, up 100% YOY, was the other finished steel products exported from Iran.

Exports of direct-reduced iron increased by 287% YOY to 673,000 tons, ISPA figures show.