Marked Decline in Steel Output Due to Power Outage
EghtesadOnline: A new report by the Iranian Steel Producers Association shows a significant decline in domestic steelmakers’ production.
Iranian steelmakers produced a total of 10.83 million tons of semi-finished products during the first five months of the current fiscal year (March 21-Aug. 22), down 12% year-on-year.
According to ISPA, billet and bloom made up 6.49 million tons of total semi-finished production, down 15% YOY and 54% month-on-month.
Slab output reached 4.33 million tons to register a 9% and 42% decline YOY and MOM respectively.
The output of finished steel decreased by 11% YOY to 7.57 million tons.
Long steel products had a 4.29 million-ton share in the output of finished steel products, posting a 7% decline compared with the similar period of last year.
Rebar production stood at 3.52 million tons (down 7% YOY and 46% MOM). It was followed by beams with 454,000 tons (down 11% YOY and 29% MOM) and L-beam, T-beam and other types with 324,000 tons (down 2% YOY and 43% MOM).
Production of flat steel with 3.27 million tons registered a 17% YOY decline in the five-month period.
Hot-rolled coil made up 3.23 million tons of the production in this category, showing a 15% and 28% YOY and MOM decline respectively, followed by cold-rolled coil with 1.02 million tons, down 10% and 12% YOY and MOM respectively; and coated coil with 618,000 was unchanged from last year’s corresponding period but fell by 6% month-on-month.
Iran's output of direct reduced iron stood at 12.36 million tons during the period under review down 4% and 44% YOY and MOM respectively.
The decline in steel output is due to the power outages and restrictions imposed for steelmakers in the past few months.
Deputy Industries Minister Saeed Zarandi estimates the losses caused by power outages for steel mills (only those falling under the Iranian Mines and Mining Industries Development and Renovation Organization) to reach $235 million per week.
Summer demand has led to a severe power and water shortage in the past weeks in most regions resulting in blackouts and dry taps.
Electricity consumption on June 20 surpassed 62,000 MW.
The new record came as high temperatures nationwide drove general electricity consumption to new heights.
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 capacity during specific hours.
The abrupt curbs on the two key sectors created steel and cement shortages in local markets and prices increased overnight, creating new problems for most construction sectors.
Rasoul Khalifeh-Soltani, the head of Iranian Steel Producers Association, said at the heat of the blackouts that power outages shut down 85% of steel industry’s production.
Iran is pursuing the target of becoming the world’s sixth largest steel producer as per the 20-Year Vision Plan, which targets annual production capacity expansion to 55 million tons and 20-25 million tons of exports per year by 2025.
“To achieve the goal of 55 million tons per year steel production capacity, we have a shortage of at least 5,000 megawatts of electricity,” Zarandi was quoted as saying by Mehr News Agency.
Noting that production conditions were satisfactory until the third month of the current fiscal year (June 22-July 22) before facing the challenges of electricity supply and power outages, Zarandi said, “In the past three months due to a lack of electricity supply to production units, especially in the cement and steel sectors, we faced problems.”
Tavanir Spokesman Mostafa Rajabi Mashhadi said all power restrictions for industries will be removed by Sept. 23.
Appreciating the good cooperation of the steel industry this summer, he announced the end of electricity supply restrictions to the industry by the date.
“This summer, a series of challenges such as unprecedented drought made it difficult to provide sustainable electricity to all subscribers, so given the priority of electricity supply to households and the public sectors, we were forced to impose restrictions on the industrial sector,” he was quoted as saying by ISNA.
Referring to restrictions applied worldwide in peak consumption periods, he said, “In our country, there was no restriction on industrial consumption from 12:00-10:00 a.m.”
Iranian steel mills produced a total of 17.8 million tons of crude steel in the first seven months of 2021, which indicate a 9.9% rise compared with the corresponding period in 2020.
As per the latest report released by the World Steel Association, Iran's July output amounted to 2.6 million tons, up 9% year-on-year.
The report ranks Iran the world’s 10th biggest crude steel producer.
China was the world’s largest crude steel producer in the seven-month period with 649.3 million tons of steel output, up 8% YOY.
It was followed by India with 68 million tons (up 28.7%), Japan with 56.1 million tons (up 16.2%), the United States with 49.5 million tons (up 18.5%), Russia with 44.9 million tons (up 9.2%), South Korea with 41.3 million tons (up 8.7%), Germany with 23.6 million tons (up 18.9%) and Turkey with 22.9 million tons (up 17.7%).
Iran is placed after Brazil (ninth) with 21 million tons, 22% higher than the corresponding period of 2020.
The world’s 64 steelmakers produced a total of 1.17 billion tons of steel over the seven months under review, up 12.4% YOY. States located in Asia and Oceania collectively produced 853 million tons of the total.
The Middle East produced 25.3 million tons of crude steel in the seven months under review, posting an increase of 10% compared with the same period of last year.
Global steel output also experienced a 3.3% growth in July to 161.7 million tons.
World's major steel producers seem to have recovered their output in 2021, after the global closure of businesses and disruption in industrial operations, as a result of Covid-19 spreading in early 2019.
Crude steel is defined as steel in its first solid (or usable) form: ingots and semi-finished products (billets, blooms and slabs). This is not to be confused with liquid steel, which is steel poured.
The World Steel Association is one of the largest and most dynamic industry associations in the world, with members in every major steel-producing country. Worldsteel represents steel producers, national and regional steel industry associations and steel research institutes. Members represent around 85% of global steel production.
The 64 countries included in this table represent 85% of global steel production.
Iranian steel mills produced a total of 29.02 million tons of crude steel in 2020, which indicate a 13.35% rise compared with 2019, the highest growth in output among the world's top 10 producers.