Economy, Business And Markets

ESC Steel Output Rises

ESC Steel Output RisesESC Steel Output Rises

Esfahan Steel Company (ESC) produced a record high of 2.7 million metric tons of crude steel during the past Iranian calendar year (ended March 20), indicating 20% growth compared to the previous year, IRNA reported.

“The company’s sales and exports witnessed 56% growth last year, as the company is the only steelmaker in the country to use blast furnace technique, said Ardeshir Sa’d Mohammadi, the ESC directing manager, who added that the technique increases the production cost for producing each kilogram of steel by 4,210 rials (almost 15 cents based on official currency exchange rate) compared to direct reduction method. He also pointed to different fuels used in the two different methods as the natural gas for direct reduction is cheaper than the coal used in blast furnaces.

Mohammadi added that the ESC has bought a factory which produces wide flange beams in an effort to seize the 1-million-ton domestic market as well as the regional market. According to him, as many as 48 companies are in cooperation with the ESC to produce rebars, while it collaborates with 9 companies for producing beams.

He added that his company signed a deal with the ministery of industry, road and urban development and the ministry of cooperatives and labor to start a national project to produce rails. The project has a physical progress of 42%, he added.

The sharp global decline in iron ore prices has provided a good opportunity for steel producers since it has reduced their costs by at least 60%. The iron ore which cost more than $140 per ton in 2013 is now sold at $50. Although this can be favorable for the countries which import the raw material and turn it into steel, the global decline has hit Iran’s steel sector, as it used to be among the world’s big exporters of iron ore. This has not been the only challenge faced by the steel and mining industries during the past few years. The anti-Iran sanctions imposed by the West over the country’s nuclear energy program have also hindered the development of the mining sector.

The removal of sanctions can create a competitive atmosphere in the mining sector and the European companies will be able to step in, Mahmoud Noorian, the managing director of Chadormalu Mining and Industrial Company, told Mehr news. He added that the elimination of middlemen will be the most important outcome of the lifting of sanctions.

Meanwhile, a possible nuclear deal between Iran and the major powers could bring the construction and housing markets out of stagnation. The domestic steelmakers, who suffered a lot from the downturn in the construction industry during the past two years, hope that a boom in the housing market would once again increase the demand for structural steel. An anticipated surge in the auto market can also boost demand for steel and steel products, Ashraf Semnani, the adviser to the Middle East Mines & Mineral Industries Development Holding Company (MIDHCO), told Eghtesadnews.