Heavyweight Iranian Steelmakers Register 22% Growth in Exports

EghtesadOnline: Nineteen major steelmakers of Iran exported an aggregate of 4.94 million tons of steel products during the current fiscal year’s first eight months (March 21-Nov. 21), registering a 22% year-on-year growth, new data released by the Iranian Mines and Mining Industries Development and Renovation Organization show.

News ID: ۷۸۷۴۴۵

18 December 2021

Their exports during the month ending Nov. 21 stood at 684,203 tons, up 7% YOY.

Total steel exports from Iran, including shipments by small-scale producers, are much higher than the figure quoted by IMIDRO. Iranian Steel Producers Association will soon release a more comprehensive report.

Khouzestan Steel Company exported 1.12 million tons of products in the eight-month period to register an 18% year-on-year rise and top the list of Iranian exporters.

KSC's exports in the eighth month of the year stood at 142,112 tons, 96% higher compared with the same period of last year.

Mobarakeh Steel Company came next with 814,724 tons of exports during the eighth-month period, up 20% YOY.

MSC exported 88,599 tons of steel products in the period, down 56% YOY. It was followed by Esfahan Steel Company with 766,630 tons of exports, 19% higher YOY.

The company's exports during the month to Nov. 21 stood at 74,531 tons, 18% less YOY.

Khorasan Steel Complex registered the highest growth of 1,081% in export volume with 58,478 tons during the eight-month period.

The company’s monthly exports registered the highest growth in terms of volume, with 11,243 tons of exports, up 6,112%.

Crude Steel Production Capacity Tops 40m tons

Installed capacity of crude steel production in Iran has exceeded 40 million tons per year, according to deputy minister of industries, mining and trade, Vajiollah Jafari.

“The annual production of steel ingots has exceeded 30 million tons,” Jafari was also quoted as saying by IRNA during the 8th Steelprice Conference held recently.

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

The official 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 and another 7 million tons will be added in the current fiscal year (March 2021-22).

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

The electricity required by steel industry is at 8,000-9,000 megawatts, of which 6,000 megawatts are currently in use and a further 12,500 megawatts are required for the development projects. He mentioned that gas is also required by the steel industry to feed companies.

New Restrictions in Gas Supply to Industries

The Oil Ministry and the National Iranian Gas Company are pressuring steelmakers and mining firms to drastically cut their gas consumption, according to a report by the Persian daily Jahan-e Sanat newspaper.

Specifically, Chadormalu Mining and Industrial Company has been asked to keep its gas consumption to below 30,000 cubic meters per day until further notice. Since, the quota is less than 1% of the heavyweight mining firm’s gas consumption under normal conditions, the restriction practically means cessation of production in Chadormalu, inflicting huge losses in lost production.

The report noted that certain companies have been restricted for longer periods, while others will be less affected.

It went on to say that DRI producers are the prime target of new restrictions due to their energy-intensive nature, adding that since DRI is considered a strategic product in the steel industry, the measure will impact the entire steel production chain and lead to a massive decline in the output of steel products and rising prices.

With the decline in temperature across Iran, gas consumption in households reached a record high.

According to Oil Minister Javad Owji, daily household gas demand has surpassed 650 million cubic meters, showing a 40% or 140 mcm rise compared with the same period of last year.

The Oil Ministry’s proposal to hike natural gas tariffs in the household sector was recently ratified by the Cabinet, based on which the vital commodity’ price will rise on average by 40%.

The ministry reportedly compensates the cement producers’ financial loss through discounts in mazut bills.

This is not the first time that industries, especially steelmakers, are facing power restrictions. In the summer of the current fiscal year (July 23-Sept. 22), steel production declined by 40% compared with the previous quarter (March 21-June 22) due to electricity cuts amid record high domestic consumption.

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 a severe power and water shortage in summer in most regions, resulting in blackouts and dry taps.

Electricity consumption surpassed 62,000 MW on June 20.

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

As the manufacturing 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 been only allowed to work at a fraction of their demand within specified 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.

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

Noting that Iran is the world’s 10th biggest steelmaker, Vahid Yaqoubi, the vice president of Iranian Steel Association, says with such power restrictions, the country risks losing its position.

Latest data released by the World Steel Association show Iran’s steel output has declined, yet the country’s world standing remains unchanged.

Iranian steel mills produced a total of 22.4 million tons of crude steel in the first 10 months of 2021, to register a 5.7% decline compared with the corresponding period of 2020.

As per the latest report released by the World Steel Association, Iran's October output hit 2.2 million tons, down 15.3% 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 period with 877.1 million tons of steel output, down 0.7% YOY.

It was followed by India with 96.9 million tons (up 20.6%), Japan with 80.4 million tons (up 17.5%), the United States with 71.7 million tons (up 19.6%), Russia with 62.5 million tons (up 5.7%), South Korea with 58.7 million tons (up 5.9%), Germany with 33.6 million tons (up 15.1%) and Turkey with 33.3 million tons (up 14.2%).

Iran is placed after Brazil (ninth) with 30.3 million tons (up 19.1% YOY).

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

Yaqoubi also pointed to steelmakers’ export obligations and said producers are often pre-ordered for the next three months and if they cannot supply the required DRI and other products, they will suffer massive losses in addition to a loss of their reputation internationally.

According to the official, currently one or two steel production units have encountered gas outages, while other units have been warned and some units have reduced consumption to 50% of their usual demand and some to 3% of their demand, which led to closure of those units.