Economy, Business And Markets

Debate Over Steel Import Tariffs

Debate Over Steel Import TariffsDebate Over Steel Import Tariffs

Contrary to the popular belief among steel industry experts that imposing higher import tariffs will help the domestic steel sector, a member of Auto Parts Manufacturers Association (APMA) board of directors, Mohammad-Reza Najafi-Manesh, says the decision could aggravate the steel industry’s problems.

Criticizing a recent decision by the government to impose higher import tariffs on 114 different steel products, he said: “The import tariff on these steel products has increased to 15% from the previous rate of 4%. This is while a 20% tariff has been imposed on importing the raw materials required for manufacturing the same products. The decision makes domestic manufacturing of steel products unfeasible,” Fooladnews reported.

He cited the example of alloy steel and spring parts which are currently manufactured domestically, noting that the high tariff imposed on importing their raw material makes their manufacturing uneconomical. He urged the officials to reconsider their decision regarding the import tariffs.

Based on a recent resolution approved by the administration, the import tariffs have been set at 10% for steel ingots, 15% for steel sheets and 20% for rebars (reinforcing bars) and iron beams. Officials claim that the resolution excludes steel products that are not manufactured domestically from the high tariffs.

Steelmakers have for months urged the government to impose protective import tariffs on steel products, arguing that the absence of punitive tariffs on Chinese or Indian steel products would lead to the closure of domestic steel mills. Steel manufacturers now seem to be satisfied with the government’s recent decision, though it came later than they expected.

The country’s steel industry is influenced by multiple factors including the global supply and iron ore prices, the import tariffs, and the prevailing political atmosphere; with the latter having been rather unfavorable in recent years. Western sanctions, imposed on Iran for the past five years over its nuclear energy program, have caused numerous problems for the industrial sectors and hampered banking transactions. Meanwhile, some steel experts believe a possible agreement between Iran and the West might not yield positive results in the short run.

Member of board of directors at Iranian Steel Producers Association (ISPA), Bahador Ehramian, says domestic markets have been experiencing a relatively positive atmosphere in the past 18 months after an interim deal was reached between Iran and the P5+1 (five permanent member of UN Security Council plus Germany); However, he observed that a possible final deal would not lead to a sudden improvement in the country’s steel industry considering the fact that global steel prices are decreasing, Fooladnews reported.

He, however, acknowledged the efforts made by the current administration, led by President Hassan Rouhani, aimed at supporting the private sector and liberalizing the prices.