Apparent Steel Usage Hit by Decline in Production

EghtesadOnline: Iran's apparent steel usage marked a decline in the current Iranian year’s first eight months (March. 21-Nov. 21) compared with last year's corresponding period.

News ID: ۷۸۷۵۰۶

26 December 2021

Apparent steel usage is defined as production plus imports minus exports, sometimes also adjusted for changes in inventories.

The apparent usage totaled 11.26 million tons for finished products, posting a 12% year-on-year decrease, according to the Iranian Steel Producers Association.

Long steel products accounted for the largest portion of finished steel consumption with 5.67 million tons, down 12% YOY.

Rebar grabbed the biggest share in this section with 4.5 million tons, down 14% YOY, followed by beams with 713,000 tons (down 4% YOY) and L-beam, T-beam and other types with 444,000 tons (down 1% compared with the same period of last fiscal year).

Flat steel products accounted for 5.51 million tons of finished steel apparent usage, down 10% YOY.

Among flat steel products, hot-rolled coil had the biggest share of apparent usage with 5.21 million tons (down 12% YOY), followed by cold-rolled coil with 1.8 million tons (down 7% YOY) and coated coil with 906,000 tons (down 7% compared with the same period of last year).

The apparent usage stood at 11.26 million tons for semi-finished products, registering a 12% decline compared with last year's corresponding period.

The apparent usage of billet and bloom amounted to 7.74 million tons, down 22% compared with the same period of last year. The use of slab also decreased by 12% to 5.99 million tons during the period.

DRI usage declined by 5% to 19.24 million tons, during the period under review.

Output Hit by Power Restrictions

The ISPA data show a significant decline in domestic steelmakers’ production during the period under review.

Iranian steelmakers produced 18.53 million tons of semi-finished products during the first eight months of the current fiscal year (March 21-Nov. 21), down 10% year-on-year.

According to ISPA, billet and bloom made up 10.96 million tons of total semi-finished production, down 15% YOY.

Slab output reached 7.57 million tons to register a 2% decline year-on-year.

The output of finished steel decreased by 8% YOY to 12.82 million tons.

Long steel products had a 7.39-million-ton share in the output of finished steel products, posting a 3% decline compared with the similar period of last year.

Rebar production stood at 6.04 million tons (down 3% YOY). It was followed by beams with 808,000 tons (down 6% YOY) and L-beam, T-beam and other types with 542,000 tons (unchanged from the corresponding period of last year).

Production of flat steel with 5.44 million tons registered a 13% YOY decline.

Hot-rolled coil made up 5.44 million tons of the production in this category, showing a 10% YOY decline, followed by cold-rolled coil with 1.63 million tons, down 10% YOY, and coated coil with 975,000 tons, down 7% YOY.

The output of direct reduced iron stood at 20.07 million tons during the period under review, down 3% YOY.

The decline in steel output is due to power outages and restrictions imposed on steelmakers in summer.

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

Specifically, Chadormalu Mining and Industrial Company has been asked to keep its gas consumption 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 also noted that certain companies have been restricted for longer periods, while others will be less affected.

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

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

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 during March 21-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 summer in most regions, resulting in blackouts and dry taps.

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

As the manufacture of steel and cement products is an energy-intensive process, related factories were 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.

According to Tavanir Spokesperson Mostafa Rajabi-Mashhadi, summer electricity restrictions imposed on industries were removed as of Sept. 23.

Finished Steel Imports Down 13%

Imports of finished steel decreased by 13% YOY to 533,000 tons during the same period.

The imports mostly included HRC with 89,000 tons, down 62%; CRC with 197,000 tons, up 17%; coated coil with 151,000, up 1%; L-beam, T-beam and other types with 27,000 tons, down 10% YOY; rebar with 21,000 tons, up 17% and beam with 11,000 tons, up 57%.

Semi-finished steel imports made up 4,000 tons of the total import volume, unchanged YOY.

Iran imported 2,000 tons of billet and bloom in the period, down 33% YOY. Slab imports stood at 2,000 tons, up 100% from last year's same period.

Iran did not import DRI during the period under review.

Strong Rise in Exports

A total of 4.8 million tons of semi-finished steel products were exported from Iran from March 21 to Nov. 21, up 27% compared with the previous year’s similar period.

Billet and bloom had the lion’s share of semis exports with an aggregate of 3.22 million tons, 12% higher than the previous year’s corresponding period.

Slab exports amounted to 1.58 million tons during the period, up 73% year-on-year.

Exports of finished steel products grew by 30% to 2.19 million tons during the eight months.

Rebar accounted for the largest portion of finished steel products exported from Iran during the period, with 1.56 million tons. The total volume of Iran’s rebar exports experienced a 59% growth compared with the same period of last year.

Beam exports amounted to 96,000 tons during the period under review, down 20% YOY.

About 125,000 tons of L-beam, T-beam and other types were also exported from Iran during the period, unchanged from the corresponding period of last year.

Hot-rolled coil exports amounted to 317,000 tons, registering a 15% decline compared with the year before.

Cold-rolled coil with 13,000 tons registered a 48% decline year-on-year and coated coil with 77,000 tons, up 40% YOY, was the other finished steel product exported from Iran.

Exports of direct-reduced iron increased by 105% YOY to 827,000 tons, ISPA figures show.