Following a decline in temperature and electricity consumption by domestic users, in addition to growing action against illegal crypto miners, restrictions on power supply to the industrial sector have been lifted, Mostafa Rajabi Mashhadi, spokesman of the Iran Power Generation, Distribution and Transmission Company (locally known as Tavanir), told IRNA.
In a letter to the Supreme National Security Council, the Iranian Steel Producers Association put steel mills’ losses due to power outages at $6 billion from the beginning of the current Iranian year (March 21) to Sept. 12.
According to ISPA, 82 complete days of productions 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 (Steeliran.org) reported.
Summer demand led to a severe power and water shortage in the past months in most regions, resulting in blackouts and dry taps.
Nevertheless, electricity consumption on June 20 surpassed 62,000 MW.
The new record came, as high temperatures nationwide drove general electricity consumption to new heights, prompting authorities to prioritize domestic users over industries in supplying power.
As the manufacturing of steel and related products is an energy-intensive process, steel and cement 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 of the day.
The power 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 the power outages shut down 85% of steel industry’s production.
Underlining the hefty losses incurred by steelmakers, ISPA called for supportive measures to compensate for at least part of the losses, by ensuring a steady supply of gas for steel industry throughout autumn and winter, and deferring loan repayments, debts, bills and tax dues for at least six months.
Deputy Industries Minister Saeed Zarandi recently estimated the losses caused by power outages for steel mills (only those falling under the Iranian Mines and Mining Industries Development and Renovation Organization) to run at $235 million a week.
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 of annual 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 sector, we bumped into problems.”
Steel Production Declines
The steel sector registered a significant decline in production in recent months.
According to the latest ISPA data, Iranian steelmakers produced 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.
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).
The 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 unchanged from last year’s corresponding period but down 6% MOM.
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.
