Iranian steelmakers registered a decline in production during the first six months of the current fiscal year (March 21-Sept. 22).
According to data released by the Iranian Steel Producers Association, they produced a total of 12.99 million tons of semi-finished products during the period, registering a 14% decline compared with 15.03 million tons in last year’s corresponding period.
Billet and bloom made up 7.74 million tons of semi-finished production, down 17% YOY.
Slab output hit 5.26 million tons to register a 9% decline year-on-year.
The output of finished steel decreased by 10% YOY to 9.28 million tons.
Long steel products had a 5.31 million-ton share in the output of finished steel products, posting a 4% decline compared with the similar period of last year.
Rebar production stood at 4.36 million tons (down 4% YOY). It was followed by beams with 566,000 tons (down 10% YOY) and L-beam, T-beam and other types with 390,000 tons (down 1% YOY).
The production of flat steel with 3.97 million tons registered a 16% decline in the six-month period.
Hot-rolled coil made up 3.91 million tons of the production in this category, showing a 15% decline compared with the similar period of last year, followed by cold-rolled coil with 1.22 million tons, down 11% compared with the same period of last year, and coated coil with 731,000 tons (down 5%).
Iran's output of direct reduced iron stood at 14.79 million tons, down 5% YOY, ISPA’s data show.
Upshot of Power Supply Restrictions
The decline in production has to do with blackouts and power supply restrictions of the past months.
In a letter to the Supreme National Security Council, ISPA has put steel mills’ losses due to power outages at $6 billion from March 21 to Sept. 12.
According to ISPA, 82 days of productions were wasted during the period due to power outages and 300,000 direct and indirect jobs were lost or restricted, the news portal of the association reported.
Summer demand led to a severe power and water shortage in the past months in most regions, which resulted 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, 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 subsequently 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 specified period.
The abrupt ban on the two key sectors created shortages of steel and cement in local markets and prices increased overnight, which created 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, through a steady gas supply 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 that the losses caused by power outages for steel mills (only those falling under the Iranian Mines and Mining Industries Development and Renovation Organization) to have reached $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 per year 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 a lack of electricity supply to production units, especially in the cement and steel sector, we bumped into problem.”
According to Tavanir Spokesman Mostafa Rajabi Mashhadi, all power restrictions for industries were removed as of Sept. 23.
Appreciating the cooperation of steel industry in summer, he announced the end of electricity supply restrictions for 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 sector, we were forced to impose restrictions on the industrial sector,” he was quoted as saying by ISNA.
Top Steelmakers
Mobarakeh Steel Company, the largest steel producer in Iran, produced 4.41 million tons of semi-finished product in H1, down 11%.
MSC also topped the list of finished steel producers with 3.73 million tons, down 11% YOY, according to the Iranian Mines and Mining Industries Development and Renovation Organization.
Located in southwestern Isfahan, Mobarakeh Steel Company is the biggest steel producer not only in Iran but also in the Middle East and North Africa region.
In terms of semis production, MSC was followed by Khuzestan Steel Company with 1.43 million tons of output during the period.
Esfahan Steel Company came next with 1.13 million tons of semis output during the six months.
South Kaveh Steel Company with 615,761 tons, Chadormalu Steel Company with 456,260 tons and Khorasan Steel Company with 415,363 tons were other main producers of semi-finished products during the period.
In terms of output of finished products, MSC was followed by ESCO with 1.07 million tons.
Other key producers of finished products were Kavir Steel Company, Oxin Steel Company, Khorasan Steel Company, Bonab Sheet Company, Azarbaijan Steel Company and Sirjan Steel Company.
MSC topped the list of both semi-finished and finished steel production in the sixth fiscal month (Aug. 23-Sept. 22) by producing 781,574 and 634,358 tons of semis and finished steel products respectively.
A total of 1.62 million tons of semis were produced in the month under review, 19% lower than last year’s corresponding period.
And, finished steel products’ output during the period stood at 1.15 million tons, registering a 9% decline year-on-year.
