EghtesadOnline: Coming out of a prosperous year with rising sales and profits, Iranian steel companies had a slower growth in the first three months of the current fiscal year (March 21-June 21), but still managed to notch solid gains.
Iran’s seven major steel companies sold over 4.2 million tons of steel products worth about 100 trillion rials ($2.3 billion) during the first quarter, posting a 4.4% drop in volume and 42.7% uptick in value year-on-year.
The steelmakers produced a total of 5.49 million tons of steel products in Q1, registering an 18% growth YOY.
The seven companies analyzed are all listed on either Tehran Stock Exchange or Iran Fara Bourse. Their production and sales data have been compiled using company reports published on Codal.ir, according to Financial Tribune.
> Mobarakeh Retains Top Spot
Iran’s largest flat steelmaker, Mobarakeh Steel Company, topped the charts in terms of sales value as it sold 47 trillion rials ($1.1 billion) worth of hot- and cold-rolled, coated steel as well as “other” products during the period under review, rising 41.5% YOY.
MSC, which is also Iran’s largest steelmaker in terms of capacity, produced a total of 1.92 million tons of steel products in spring to post a 14% YOY growth.
Hot-rolled products were MSC’s main output with production reaching 1.27 million tons, 1.09 million tons of which were sold for 28 trillion rials ($667.9 million). HRC production was up 27.7%, sales volume surged 1,185% and sales value jumped 59.27% YOY.
Mobarakeh's HRC production growth improved over last fiscal's Q1 when it only grew 8% YOY. But the highlight is the surge in sales, which can be attributed to the recent huge increase in demand for MSC's products on Iran Mercantile Exchange.
> KSC Sales Grow 34.5%
Iran’s largest steel exporter, Khouzestan Steel Company, followed by selling 21.82 trillion rials ($519.7 million) of bloom and billet, slab and pellet, which indicate a 34.5% rise YOY.
KSC’s total output for the period stood at 976,434 tons with sales volume standing at 1.08 million tons, growing 3% in output and dropping 2.3% in sales YOY respectively.
Exports made up 764,296 tons of the company’s total sales volume during the period, valued at 16.43 trillion rials ($391.3 million).
With exports making up most of KSC's overall sales, the company may be the first to feel the pinch when US sanctions on Iran's steel sales are enforced in August. Whether the company can meet greater local demand, or come up with measures to skirt around sanctions remains to be seen.
> Change in ESCO's Fortunes?
Esfahan Steel Company's sales rose 49.3% YOY to 10.95 trillion rials ($260.8 million), while output grew 8% YOY to 567,723 tons as sales volume dropped 45% YOY to 409,840 tons.
It seems that ESCO has improved its standing compared to the last fiscal year, but has failed to pick up on the recent surge in local demand.
Still, the news regarding selling a majority stake in the steelmaker, which surfaced last month, could dramatically change things.
ESCO’s major shareholder, Social Security Investment Company, announced in early June that it has received bids from two large local and foreign firms for the stake. Nothing has officially been confirmed yet, but rumors point to MSC as the local bidder and India’s Essar Steel as the foreign one.
Essar itself, however, is being taken over by the Luxembourg-based ArcelorMittal, meaning that they could be the actual buyers behind this.
ESCO recently delivered the first batch of domestically made rails to the Islamic Republic of Iran Railways. These rails were long in the making and are still not made to IRIR’s desired high-speed standards, but their production shows an ESCO striving to deliver. If it does this year, things could change on the company’s performance sheet.
> Other Steelmakers
Khorasan Steel Company came next as it sold 6.28 trillion rials ($149.5 million) of steel products in Q1, up 96.7% YOY. Its output and sales were also on the rise, as they grew 73% and 3% YOY to 938,469 tons and 278,138 tons respectively.
Next was Hormozgan Steel Company with sales growing 8.3% YOY to 5.7 trillion rials ($136 million). Production and sales volume stood at 412,814 and 263,533 tons, rising 21% and dropping 22.5% respectively.
And then there was South Kaveh Steel Company with sales value reaching 5.29 trillion rials ($126 million), marking a rise of 110% YOY. Production and sales volume were up 16% and 19.7% YOY to 579,308 and 276,349 tons respectively.
Iran Alloy Steel Company came last with 2.81 trillion rials ($67.13 million) in sales value, up 128% YOY. Production was down 22% YOY to 90,677 tons and sales volume also dropped 17.6% YOY to 89,958 tons.