The country’s output of semi-finished steel stood at 8.58 million tons in the first quarter of the current fiscal year (March 21-June 21), 6% more than in the corresponding period of last year, the Iran Steel Producers Association announced.
Billet and bloom made up 5.06 million tons of total semis production, registering a 4% year-on-year growth.
Slab output stood at 3.51 million tons to register a 10% YOY rise.
The output of finished steel increased by 5% to 5.67 million tons.
Long steel products had a share of 3.15 million tons in the output of finished steel products, posting a 2% increase compared with the similar period of last year.
Rebar production stood at 2.59 million tons (up 2% YOY) and was followed by beams with 325,000 tons (up 2% YOY) and L-beam, T-beam and other types with 235,000 tons (up 1% YOY).
The production of flat steel with 2.52 million tons registered a 10% YOY increase.
Hot-rolled coil output stood at 2.45 million tons, marking a 9% YOY growth, followed by cold-rolled coil with 616,000 tons, down 5% YOY, and coated coil with 406,000 tons, up 2%, compared with last year’s corresponding period.
The output of direct-reduced iron stood at 9.92 million tons during the period under review, up 13% YOY.
Iranian steelmakers have suffered gas supply restrictions in winter in recent years, leading to a decline in output and sometimes closure of many small- and medium-sized production lines.
Impact on Industries
In the winter of last Iranian year (Dec. 22, 2021-March 20, 2022), Iran faced a large deficit in gas production.
According to Oil Minister Javad Owji, there was a deficit of between 200 and 250 million cubic meters of natural gas during the period.
Although this imbalance did not cause outage for domestic consumers, it had a drastic impact on steel and petrochemical producers.
“For the development of steel industry, we need direct-reduced iron plants, which consume gas, and providing it is a need and a fundamental challenge in planning for the steel industry,” Vahid Yaqoubi, the deputy head of Iran Steel Producers Association, was quoted as saying by Mehr News Agency.
“In last year’s Q4, production did not decrease in some plants because steelmakers like Mobarakeh Steel Company are strategic, but on the other hand, new steelmakers that became operational in the last few years as well as DRI production plants were hard hit. That's why we saw fewer outages in our steel units, but it should be noted that natural gas has no alternative in the steel industry,” he said.
"For example, in the production of power plants, natural gas can be replaced by liquefied gas, but in the process of producing steel from DRI, there is no other alternative, and gas is extremely vital for this industry.”
According to the official, total production declined by 2.2 million tons in the fiscal 2021-22 compared to the year before, which also saw some power and gas outages.
“In the fiscal 2021-22, the [steel production] target was 34 million tons, but we reached about 27.9 million tons, which means we had a loss of about 6 million tons against the target,” he said.
Losses Hit $5-6 Billion
Drawing on global prices of last year, Yaqoubi noted that the steel industry suffered $5-6 billion in losses due to the gas outage.
“In general, a decrease in supply leads to a rise in prices. For example, due to the gas shortage in the summer of last fiscal year (June 22-Sept. 22), we saw a big jump in prices, because in this period, as per the decision of the Supreme National Security Council, the steel mills could only use 10% of their production capacity, and after we requested a reassessment of this decision, only 20% of the production capacity were reinstated. This decline in supply caused a sharp increase in prices in the Q2 of last year,” he said.
“Although the situation improved this year, with the coordination of the Ministry of Energy, Ministry of Industries and Iran’s Steel Producers Association, restrictions were not imposed on only cement and steel industries [as in last summer] and were spread among other industries as well.”
Lauding the management of the Energy Ministry this year, the official said this summer, there will not be more than a 30% decline in production.
On the impact of gas outages during the winter of last year on steel production and supply, Yaqoubi said that in last year’s Q4, because the plants expected to suffer from gas restrictions, they planned to carry out repairs at the time, causing the supply of DRI to remain stable, although the issue led to a 20% rise in prices.
