New data released by the World Steel Association show Iran registered the biggest growth in crude steel production last year among the top 10 biggest producers in the world.
Iranian steel mills produced a total of 30.6 million tons of crude steel in 2022, registering an 8% rise compared with 2021.
Iran's December output hit 2.7 million tons, registering a 3.3% year-on-year rise.
In terms of world ranking, Iran maintained its global standing as the world’s 10th biggest crude steelmaker.
China was the world’s largest producer with 1.01 billion tons, down 2.1%. It was followed by India with 124.7 million tons (up 5.5%), Japan with 89.2 million tons (down 7.4%), the United States with 80.7 million tons (down 5.9%), Russia with 71.5 million tons (down 7.2%), South Korea with 65.9 million tons (down 6.5%), Germany with 36.8 million tons (down 8.4%) and Turkey with 35.1 million tons (down 12.9%).
Iran is placed after Brazil (ninth) with 34 million tons (down 5.8%).
The world’s 64 steelmakers produced 1.83 billion tons of crude steel last year, down 4.3%. Countries located in Asia and Oceania collectively produced 1.35 billion tons of the total.
The Middle East produced 44 million tons of crude steel during the period, registering an increase of 7.1%.
Crude steel is defined as steel in its first solid (or usable) form: ingots and semi-finished products (billets, blooms and slabs). This is not to be confused with liquid steel, which is steel poured.
The World Steel Association is one of the largest and most dynamic industrial associations, with members in every major steel-producing country.
Worldsteel represents steel producers, national and regional steel industry associations and steel research institutes. Members represent around 85% of global steel production.
The 64 countries included in the Worldsteel report produce 85% of global steel. These steelmakers produced 1.91 billion tons of steel last year, up 3.6%.
In 2021, countries located in Asia and Oceania collectively produced 1.38 billion tons of the total while the Middle East produced 41.2 million tons of crude steel, posting an increase of 1.2% compared with the same period of the previous year.
Iranian steel mills produced a total of 28.5 million tons of crude steel in 2021, registering 1.8% decline compared with 2020.
MSC is the biggest steelmaker in Iran and the Middle East and North Africa region, accounting for about half of the country's steel production.
Gas Supply Restrictions
Shortage of gas has become a major headache for the steel industry in recent years. The restrictions on gas supplies to steel mills has intensified since last year; so much so that direct reduced iron production units have had to close down or under server restrictions, which has consequently affected the steel industry, Vahid Yaqubi, executive manager of the Iranian Steel Producers Association, said recently.
“Due to gas and electricity supply restrictions we fell behind by about 6 million tons from out steel production plans last year [March 2021-22],” he was quoted by the news portal of Iran Chamber of Commerce, Industries, Mines and Agriculture as saying last week.
The sharp drop in temperatures in recent weeks, including in the capital Tehran, has led to an unprecedented increase in energy consumption. Iran has also lost gas import from Turkmenistan due to problems in the Central Asian country’s domestic supply network. Moreover, the cheap price of gas in the country has led to excessive consumption leading to shortage despite the fact that it has the world’s second largest reserves. Amid the shortage, the state-run National Iranian Oil Products Distribution Company has cut supply to industries in a bid to meet the growing needs of households.
“Despite the better management of electricity in the summer [June 22-September 22, 2022] compared with the corresponding period of last year, the gas restrictions started sooner this year. While our plan was for the restrictions to start from the beginning of the tenth month of the year [Dec. 22, 2022-January 20], they started from the beginning of the ninth month [Nov. 22-Dec. 21, 2022]. At first, we saw 30% cut in gas supply, then 50% and 70% and currently the supply to northern steel manufacturing companies (mostly DRI plants) has been completely cut off and the plants are closed. Some arc furnaces and rolling mills have also closed since they do not have raw materials,” Yaqubi said.
Noting that gas plays a pivotal role in the steel industry, he said the Iranian steel production is based on DRI. “If there is no gas, no DRI will be produced, and in the absence of DRI, other parts of the steel manufacturing chain will be closed and the steel products cannot be produced. Therefore, the role of gas in the steel industry is vital.”
He explained that there is no replacement for gas in the Iranian steel industry.
“For example, gas can be replaced with mazut in other industries, while it is not possible in the steel industry. Therefore, with gas outage or restrictions, inevitably, all processes in the steel industry will be disrupted.”
According to the official, the steel industry’s gas usage stands at about 550 cubic meters per ton, of which 70% is used alone by DRI plants.
“In the ninth month of the current year [Nov. 22-Dec. 21, 2022], out of 40 million cubic meters of needed gas, they only supplied 15 million cubic meters. During the last 7-10 days, the weather has become colder and they’ve reduced the allocated gas volume and even the 15 million cubic meters has not been supplied.”
The ISPA chief added that due to restrictions in supply of gas to power plants, industries have also had to grapple with electricity shortage.
“For instance, for more than 40 days, the gas supply of Khorasan Steel Company has been cut off and since last week, there are electricity restrictions imposed on this plant. Mobarakeh Steel Company, the biggest steel manufacturer in Iran, has been facing a 50-70% gas usage restriction since last week besides a 30% electricity usage restriction. We fear that as the weather gets colder this restriction will also increase to 50% or more.”
According to the official, a total of 800 million cubic meters of gas is used in Iran, of which 650-700 million cubic meters are used by households and commercial units. “Therefore, there is practically no gas left for industries.”
He concluded that there is pressing need for investment in Iran’s gas industry to increase production. Meanwhile, household and commercial consumption needs to be optimized.
Earlier, he said total production decreased by 2.2 million tons in 2021-22 Iranian year compared to the year before, which also saw power and gas outage.
“In fact, in 2021-22, the target was 34 million tons [in steel production], but we reached about 27.9 million tons, which means we had a loss of about 6 million tons vis-a-vis the target.”
Drawing on global prices of last year, he said the steel industry suffered $5-6 billion in losses due to the gas outage.
“In general, a decrease in supply leads to increase in prices. For example, due to shortage of supply in the summer of last year, we saw a big jump in prices, because during this period, as per the resolution of the National Security Council, the steel mills could only use 10% of their production capacity, and after we requested a revision in this resolution, only 20% of the production capacity was reinstated. This decrease in supply caused a sharp increase in prices in Q2 of last year.”
The steel industry owns 12% of Iran’s capital market directly, he noted, adding that the share reaches around 20% taking into account upstream production chain.
“The companies’ shareholders buy the shares of steel companies by considering certain factors, and a decrease in their production has a direct effect on the profitability and value of the public shares,” he said, adding that some steel industries in the north of Iran had 53 days of gas outage last year which caused their stocks to fall compared to other stocks.
“Such problems increase the risk of operating in this market.”
