Economy, Business And Markets

Steel Industry Has Potential to Replace Oil Revenues

Steel Industry Has Potential to Replace Oil RevenuesSteel Industry Has Potential to Replace Oil Revenues

The steel sector could become a viable alternative to the oil sector in terms of generating revenues, especially upon completion of the value chain in the steel sector, said the deputy chairman of the Iron Ore Producers and Exporters Association of Iran (IROPEX), Bahram Shakouri.

“Upon the completion of the value chain, the steel industry will be capable of generating an equivalent of 2.5 million barrels of crude oil per day in revenues” Shakouri claimed.  

To achieve this goal, he stressed that the players in the industrial sector should work alongside the government to improve the supply chain in the steel industry, IRNA reported.

“In view of the global decline in metal prices and the investors’ reluctance to enter the mining industry, the sector would not witness significant growth in the coming Iranian calendar year (starting on March 21),” the expert predicted, correlating the steel sector’s prosperity with that of the mining sector.

“Growth in the domestic mining sector in the coming year will depend largely on the country’s economic conditions and the government’s attitude towards the miners. This is while international markets are currently not suitable for investment due to the global decline in copper and iron ore prices,” Shakouri said.

What makes the prospect for the mining sector look bleak in the coming year, according to Shakouri, is that the government’s financial resources are strictly limited and banks are unable to efficiently finance the mining projects. He urged the private sector and the administration to do their best to stimulate growth in the mining industry, as the backbone of the steel sector, in the face of all the domestic and international constraints.

Based on the country’s 2025 Vision Plan, Iran is expected to produce 55 million tons of crude steel by the next decade. Officials and industry experts strongly believe that accomplishing the objective requires the country to significantly increase the production of iron ore and expand the production of iron ore concentrate and iron ore pellets, which are needed to produce direct-reduced iron (DRI) and subsequently crude steel.

Last year, the country graduated to 14th global rank in producing crude steel by making 16.3 million tons, 0.8 million tons up from 2013. The country is currently the biggest crude steel producer in the Middle East, followed by Egypt and Saudi Arabia.