In a letter to the Supreme National Security Council, the Iranian Steel Producers Association has put the losses incurred by steel mills due to power outages at $6 billion from March 21 to Sept. 12.
According to ISPA, 82 production days 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 severe power and water shortages in the past few months in most regions, which resulted in blackouts and dry taps.
Electricity consumption on June 20 surpassed 62,000 MW. The 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 manufacture of steel and cement is an energy-intensive process, the operations of factories producing the two products were restricted by the Iran Power Generation, Distribution and Transmission Company (locally known as Tavanir) and only allowed to work at a fraction of their capacity during specific hours of the day.
The restrictions on the two key sectors created shortages of steel and cement in local markets and prices increased overnight, which created problems for most construction sectors.
Hefty Losses
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 has called for supportive measures to compensate at least part of the losses through the steady supply of gas for steel industry throughout autumn and winter, and the deferral of loan repayments, debts, bills and tax dues for at least six months.
Deputy Industries Minister Saeed Zarandi recently estimated the losses inflicted by power outages on steel mills (only those covered by 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 reach 55 million tons and exports to hit 20-25 million tons by 2025.
“To achieve the annual goal of 55 million tons of 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 lack of electricity supply to production units, especially in cement and steel sectors, we bumped into problems.”
Tavanir Spokesman Mostafa Rajabi Mashhadi says all power restrictions on 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 in the industry by that date.
“This summer, a series of challenges such as unprecedented drought made it difficult to provide sustainable electricity to all subscribers. 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.
Noting that such restrictions are applied worldwide in peak consumption periods, Rajabi said, “In our country, there was no restriction on industrial consumption from 12:00-10:00 a.m.”
ISPA Statistics
According to ISPA’s latest report, Iran’s steel output in the fourth month of the current fiscal year (June 22-July 22) registered a noticeable fall compared with the previous month and the same period of last year.
Iranian steelmakers produced a total of 1.5 million tons of semi-finished steel during the month, down 39.21% and 38.43% month-on-month and year-on-year respectively.
Billet and bloom made up 897,000 tons of semi-finished production, down 41.45% and 41.87% YOY and MOM respectively.
Slab output reached 604,000 tons to register a 33.33% YOY and a 34.77% decline MOM.
The output of finished steel decreased by 41.05% YOY to 1.07 million tons, which is down 40.99% compared with the month before.
Long steel products’ share in the output of finished steel products stood at 565,000 tons share, posting a 45.46% decline compared with similar period of last year and a 51.21% decline month-on-month.
Rebar production hit 458,000 down 46.24% YOY and down 94.72% MOM. It was followed by beams with 56,000 tons, down 51.72% YOY, down 50.44% MOM, and L-beam, T-beam and other types with 51,000 tons, down 25% and 35.44% YOY and MOM respectively.
Production of flat steel registered a 35.24% decline YOY and 23.11% MOM with 509,000 tons.
Hot-rolled coil made up 506,000 tons of the production in this category, indicating a 33.15% decline YOY and 21.91% MOM, followed by cold-rolled coil with 176,000 tons, down 19.63% MOM and down 29.31% compared with the same period of last year, and coated coil with 95,000, registering a fall of 35.81% and 28.57% YOY and MOM respectively.
Iran's output of direct reduced iron stood at 1.83 million tons, down 25.36% YOY and down 42.31% MOM.
The declining trend intensified in the fifth fiscal month during which the output of semis declined by 49% compared to the previous month. Production of long products, HRC, CRC, galvanized coil, slab, billet and bloom (together), and DRI went down by 45%, 28%, 12%, 6%, 42%, 54% and 44% respectively MOM.
According to the latest ISPA data, 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% YOY.
Billet and bloom made up 6.49 million tons of total semi-finished production, down 15% YOY and 54% MOM.
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 months.
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.
Despite the marked decline in production, steelmakers have registered significant growth in their exports.
A total of 3.08 million tons of semi-finished steel products were exported from Iran in the five months to Aug. 22, up 39% compared with the previous year’s similar period.
Billet and bloom had the lion’s share of semis exports with an aggregate of 2.05 million tons, 16% higher than the previous corresponding period.
Slab exports amounted to 1.03 million tons during the period, up 128% YOY.
Exports of finished steel products jumped by 88% to 1.39 million tons during the period under review.
Rebar accounted for the largest portion of finished steel products exported from Iran, with 1.01 million tons. The total volume of Iran’s rebar exports experienced a 99% growth compared with the same period of last year.
Beam exports amounted to 52,000 tons during the period under review, down 7% YOY.
About 72,000 tons of L-beam, T-beam and other types were also exported from Iran during the period, recording a 26% rise YOY.
Hot-rolled coil exports amounted to 215,000 tons, registering a 162% growth compared with the year before.
Cold-rolled coil with 3,000 tons, registered an 81% decline YOY.
Coated coil with 47,000 tons, up 81% YOY, was the other finished steel products exported from Iran.
Exports of direct-reduced iron increased by 190% YOY to 490,000 tons, ISPA figures show.
