Business And Markets

Gloomy Times for Steel Sector

Gloomy Times for Steel SectorGloomy Times for Steel Sector

During the first six months of the current Iranian calendar year (beginning on March 21), the country’s steel industry was in such a deep recession that the manufacturers had to gradually decrease the prices, despite growing production costs due to inflation and higher energy prices, reported Foolad News.

What happened to steel sector during the first half of the year can be evaluated as both positive and negative, said Rasool Khalifeh Soltan, the secretary of Steel Manufacturers Association of Iran.

Khalifeh Soltan said the positive steps taken by the government include liberalization of steel exports until the end of the year (March 20, 2015) which will probably be extended, allocating foreign currency with official exchange rates (26,650 rials for every US dollar instead of street rate of 32,450 rials) for steel plants to import raw material such as scrap metal and iron ore pellets, and prohibition of using official rates for importing finished steel products.

Meanwhile, there have been disappointing factors in the steel industry such as prolonged recession especially in milling and smelting. The manufacturers were not paid their production subsidies as they had been promised by the government, added Soltani as another negative prospect of the steel market.

All the economists and experts of the sector believe that the record long recession in the construction sector has been the main reason why there is very limited demand for steel sections such as iron rods and iron bars.

The government’s decision to stop thousands of unfinished development projects, which started under the Ahmadinejad administration, also negatively impacted steel sections market. The government has decided to only continue urgent projects with at least 80% of progress.

Earlier, Mohammad Azad, the head of Iran’s Steel and Iron Guild, said the current recession in the iron and steel market has put such a heavy pressure on steel manufacturers, especially the rolling mills in private sector, that they could face bankruptcy if the situation persists.