EghtesadOnline: Major Iranian steelmakers exported a total of 5.54 million tons of steel during the last Iranian year (ended March 20, 2019) to register a year-on-year decline of 25%, latest data released by the Iranian Mines and Mining Industries Development and Renovation Organization show.
The steel mills shipped out 457,585 tons during the 12th month of the year (Feb. 20-March 20), which shows a 44% decrease compared with the same month of the year before.
KSC Comes First
With a total of more than 2.18 million tons of exports over the 12 months and 183,523 tons in the 12th month under review, Khouzestan Steel Company was Iran's biggest exporter of steel last year.
Nonetheless, the mill experienced a year-on-year decline in exports both during the 12 months and in the 12th month by 21% and 30% respectively, Financial Tribune reported.
The steelmaker, located in the southwestern Khuzestan Province, exports to over a dozen countries.
About half of KSC's exports go to the Middle East and North Africa region. Its other major export destinations are located in the Far East and Americas.
Esfahan Steel Company (ESCO) exported 902,255 tons during the 12 months, down 22% YOY.
From Feb. 20 to March 20, ESCO exported 91,654 tons to register a year-on-year fall of 27%.
Largest Steelmaker at 3rd Spot
Mobarakeh Steel Company, located in Isfahan, exported 878,037 tons of products during the 12 months under review to register a 32% decrease YOY.
The company is the largest steelmaker in the Middle East and North Africa region and one of the largest industrial complexes operating in Iran.
During the 12th month, MSC joined all other steel heavyweights in Iran in registering a decline. It exported 94,353 tons, which saw a 61% decline YOY.
During the last Iranian year, all other producers, including Hormozgan Steel Company and Khorasan Steel Company, registered downturns.
The former exported 582,126 tons of slab, down by 47% YOY while the latter exported 56,776 tons of rebar, which was down by 52% YOY.
South Kaveh Steel Company also shipped out 690,000 tons of billet, indicating a 14% decline YOY.
Khuzestan Oxin Steel Company shipped out 14,328 tons of steel sheets, down 36% YOY. This is while Iran Alloy Steel Company exported 39,510 tons of rebar, going down 41% YOY.
In the 12th month, all other producers also witnessed a year-on-year decline in exports. The highest decline was registered by Iran Alloy Steel Company as the company exported 533 tons of rebar during the month, down by 84% YOY.
According to World Steel Association, Iran was the 10th biggest producer of steel in the world as it produced a total of about 25 million tons of crude steel, up 17.7% compared with 2017.
Notably, the ocuntry was the 2nd biggest producer with direct reduced iron with 25.54 million tons of output in 2018.
Iran is aggressively pursuing the target of becoming the world’s sixth largest steel producer as per the 20-Year Vision Plan, which targets an annual production capacity expansion to 55 million tons and 20-25 million tons of exports per year by 2025.
Iranian steel mills have so far realized over 30 million tons of the capacity target.
Impact of Sanctions
Iran's steel exports have come under immense pressure after the imposition of US sanctions last year.
UK-based analysts in Fastmarkets say the new round of US sanctions against Iran are expected to cut Iranian steel exports, gradually leading to lower Iranian steel output.
Although the move is largely directed at the country’s oil industry and banking system, it is still expected to aggravate the situation in the Iranian steel export market, which had already been struck by the previous set of sanctions imposed by US President Donald Trump’s administration in early August.
The latest round of sanctions was enforced in November.
Trump announced his decision to pull out of the nuclear deals Iran signed with world powers, including the United States, in May.
Shipping problems are said to be the major issue at the moment.
Under the circumstances, Iranian steel exporters have had to cut prices significantly to attract customers and compensate for the risks involved in trade with the country.
According to Deputy Minister of Industries, Mining and Trade, and Chairman of the Board of Iranian Mines and Mining Industries Development and Renovation Khodadad Gharibpour, Iranian steel industry is an export-oriented one such that the country exports more than 40% of its steel output.
"I think that’s the key question for every Iranian steel producer because export is one of the most important ratios in their production because on one side the consumption within Iran is not growing fast enough to feed all the nominal capacities coming up and on the other side you have not only sanctions from the US, you also have anti-dumping," Joachim Schroder, chairman of RCG Research & Consulting Group AG, told Financial Tribune in an interview on the sidelines of the ninth edition of "Iranian Steel Market Conference", also known as ISMC 2019.
The European Union announced definitive anti-dumping duties on the import of hot-rolled coil from Iran and three other countries in October 2017.
"I think there are two ways of solutions. There are still markets in Africa and Southeast Asia, which have not sufficient domestic production so there are some selective markets still open. That’s one way and the other way I think is to look for cooperation because the big asset of Iranian steel industries that are together with CRS [cold-rolled sheet] producers; they have the cheapest production cost and that is something where you can probably develop your business model; say, you ship semi products like slabs or billets and then you cooperate very closely with steelmakers because most of the countries don’t put any anti-dumping duties on semi products so that is a, not today or tomorrow, but that is a long-term strategy I would suggest for the big players in the market," Schroder added.
The two-day "ISMC 2019" concluded on Jan. 30. It gathered hundreds of people, including steel and mining veterans and government officials.
The annual event, a brainchild of Donya-e-Eqtesad Media Group, the parent company of Financial Tribune, is organized to discuss challenges and opportunities facing Iran's steel industry.