Mahmoud Akbari added that downstream users’ demand for the material was about 500,000 tons less than that of the total market during the period.
“MSC supplied 1.316 million tons of flats to pipe and profile producers last year, 976,000 tons of which comprised 3-mm and thinner products. Imports of this grade of steel stood at 866,000 tons for the period,” Akbari was quoted as saying by Chilan Online.
“By adding the 200,000-ton per year minimum output of smaller mills such as Ferro Gilan Complex and Ahwaz Rolling & Pipe Mills Company, the total market supply of this material reached about 2 million tons. Rolling mills consume about 510,000 tons of the figure, bringing the pipe producers’ effective demand to 1.5 million tons.”
According to Financial Tribune, Akbari noted that it is possible to put an end to imports, as many producers are operating below their actual capacity.
“The unused capacities of Gilan complex and Ahwaz rolling mill can be revived and utilized through investments, which will render imports redundant and create about 300,000 new jobs in the process,” he said.
Flat steelmakers have been engaged in a years-long dispute with the Syndicate of Steel Pipe and Profile Manufacturers over local market supply, export prioritization and pricing. MSC, as Iran’s largest producer of flats and a prolific exporter, is the main culprit in the eyes of syndicate members for piecemeal supply to local users.
Mobarakeh has so far been more transparent than the syndicate in terms of statistics. It releases export, production and sales data on a regular basis, while the syndicate is yet to announce exact figures on its demand and purported market supply deficiency.
Akbari’s comments on MSC’s activities in the local market come a few days after President Hassan Rouhani ordered the Cabinet to address the parliament’s concerns about steelmakers prioritizing flat exports over local demand.
Market experts want flat steel import duties to be reduced, and just like any producer, MSC seems concerned about lowering the tariff wall, especially when it is cutting back on exports and focusing on local market.
Head of the syndicate, Amir Hossein Kaveh, broke the news of the president’s involvement in the issue last week. According to Kaveh, a letter was penned by lawmakers to help rolling mills and flat users either increase slab supply or reduce flat steel import duties.
“Pipe and profile producers are in dire need of flat steel and rolling mills have no semis because all these materials are being exported while local steelmakers have the tariff wall to protect them,” Kaveh said.
Mobarakeh officials have repeatedly emphasized that declining prices and lack of robust domestic demand prompted steelmakers to prioritize exports over local supply for the past two years. But the tide has now turned and their “priority lies with the local market”, according to MSC’s head of exports, Alireza Mansouri.
MSC has set its sales target at 7 million tons of flat steel in the current fiscal year (March 2017-18). The steelmaker sold 2.18 million tons during the first four months of the current fiscal year (March 21-July 22), up 19% compared with last year’s corresponding period.
“Domestic sales comprised 1.89 million tons of the total output, up 53% year-on-year,” Akbari said, noting that Mobarakeh is aiming to increase the production of HRC and slabs, while maintaining the current production capacity of cold-rolled and coated coils.