An agreement to increase Iran's annual steel production capacity by 10 million tons per annum (MTPA) by establishing a steel mill in Persian Gulf Special Economic Zone in the form of a consortium was signed on Tuesday at Iranian Mines & Mining Industries Development & Renovation Organization.
The consortium consists of seven companies, namely IMIDRO, National Iranian Steel Company, Civil Servants Pension Organization, South Kaveh Steel Company, Golgohar Mining and Industrial Company, Maad Koush Company and Persian Gulf Saba Steel Company.
Governor of Hormozgan Province Fereydoun Hemmati and Chairman of IMIDRO’s Board of Directors Khodadad Gharibpour were present in the signing ceremony, IRNA reported.
Gharibpour said the project will take five years, cost $5 billion and create 10,000 jobs.
The Persian Gulf Mining and Metal Industries Special Economic Zone is located 13 km west of the southern port city of Bandar Abbas.
Expansion Plans
The plan is a step forward in line with Iran’s aim to become 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.
The country has been working to increase its iron ore processing capacity, including both DRI and hot-briquetted iron production to feed its steelmaking expansion target.
Iranian steel mills have so far realized just over 34 million tons of the capacity target.
Gharibpour noted that IMIDRO has guaranteed the supply of water and electricity needed by the project.
Based on estimates, the project needs 18 million tons of pellet and 11.9 million tons of direct-reduced iron per year.
The latest report released by World Steel Association shows Iranian steel mills produced about 10.62 million tons of crude steel during the first five months of 2019, up 5.5% compared with 2018’s corresponding period.
Iran’s May output grew 3.8% year-on-year to hit 2.23 million tons, according to the Brussels-based international trade body for the iron and steel industry.
The report shows Iran’s ranking remains unchanged as the world’s 10th biggest crude steel producer. The country is placed between Brazil (ninth) with 14.02 million tons and Italy (11th) with 10.47 million tons, the new report shows.
The world’s 64 steelmakers produced a total of 764.07 million tons of steel over the five months, up 5% YOY.
Global steel output stood at 162.74 million tons in May, indicating a 5.4% increase YOY.
China was the world’s largest crude steel producer with 404.87 million tons of steel output, up 10.2% YOY.
Iran’s crude steel output stood at 24.52 million tons in 2018, according to Worldsteel, up 17.7% YOY.
Notably, Iran was the second biggest producer of direct reduced iron with 25.54 million tons of output last year.
India, Iran's primary rival in DRI output, increased its 2018 production by 2.9% YOY to 30.36 million tons.
Crude steel is defined as steel in its first solid (or usable) form: ingots, semi-finished products (billets, blooms and slabs). This is not to be confused with liquid steel, which is steel poured.
An Export-Oriented Industry
According to Gharibpour, who is also the deputy minister of industries, mining and trade, Iranian steel industry is an export-oriented one that exports more than 40% of its steel production.
Data released by IMIDRO show a total of 7.88 million tons of finished and semi-finished steel products were exported from Iran during the last Iranian year (ended March 20, 2019) to register a 7.17% year-on-year decrease.
Semi-finished steel made up 4.89 million tons or more than 62.12% of the total export volume, down 29% YOY.
Billet and bloom had the lion’s share of semis exports with an aggregate of 3.31 million tons to mark an 18% YOY decline. Slab followed with 1.58 million tons, down 44% YOY.
Exports of finished steel products surged 84% YOY to reach 2.98 million tons.
Rebar was the main exported finished product with 1.65 million tons, registering a 177% jump YOY.
Following rebar were hot-rolled coil with 662,000 tons, down 5% YOY; beams with 243,000 tons, up 45% YOY; “other steel products” with 212,000 tons, up 165% YOY; coated coil with 172,000 tons, up 182% YOY; and cold-rolled coil with 43,000 tons, up 115% YOY.
Exports of direct-reduced iron decreased 25% YOY to 533,000 tons during the period.
According to ISPA, Iran's apparent steel usage–defined as production plus imports minus exports, sometimes also adjusted for changes in inventories–stood at 19.79 million tons for semis, growing 31% and hit 19.61 million for finished products to drop 5% YOY.
Hot-rolled coil had the lion’s share of finished steel consumption, as it reached 7.63 million tons, down 6% YOY. It was followed by rebar with 6.21 million tons, up 8% YOY; cold-rolled coil with 2.78 million tons, down 8% YOY; coated coil with 1.54 million tons, down 17% YOY; beams with 816,000 tons, down 18% YOY; and “other steel products” with 624,000 tons, down 28%.
As for semis, billet and bloom consumption grew 42% to 10.88 million tons, while that of slab rose 20% to 8.91 million tons.
DRI usage was up 18% for the period to 25.82 million tons.
The country has been working to increase its iron ore processing capacity, including both DRI and hot-briquetted iron production to feed its steelmaking expansion target.
