Amid the ongoing long recession in the domestic steel market, steelmakers have urged the government to revive suspended development projects with the aim of increasing domestic consumption. They have also called on the government to provide them with more export incentives, Foolad-News reported.
The requests were made during a meeting attended by major manufacturers of reinforcing bars and steel ingots in which they investigated ways to prop up the steel market. They emphasized that supportive tariffs are the best way for the administration to protect the steel market.
Steel producers argue that export is not economical under the current circumstances since export prices are lower than the domestic rates. Steel prices, both domestically and globally, have remained unchanged since April. Currently, steel ingot costs around $400 per ton in Iran while steel sheet prices in the southern ports vary between $420 and $430 per ton.
“The survival of domestic steel industry will only be possible through exports; so the government is expected to support the exporting companies and provide them with incentives,” IRNA cited secretary of the Iranian Steel Producers Association (ISPA), Rasoul Khalifeh-Soltan as saying. He noted that Iran’s steel industry has experienced an average annual growth of 7% during the past few years.
Khalifeh-Soltan added that the steel industry should now focus on reducing costs in the production chain, from making the sponge iron to the final product. According to the official, special bar quality (SBQ) steels account for 15% of global production while the figure is only 3% in Iran.
Besides protective tariffs, steelmakers also urged the government to impose higher import tariffs on steel ingots and steel sections. Last year, upon repeated requests on the part of steel manufacturers, the administration imposed import tariffs of 25% on different types of girders, 35% on bundles of rebars, and from 10% to 15% on billets and ingots. However, such import tariffs have seemingly failed to satisfy the producers.
“During the past four years, utilities prices have constantly increased while interest rates for banking loans reached 30%, which greatly affected the steel prices. Therefore, tariffs of around 20% are not good enough for the domestic steel industry,” said ISPA chairman, Bahram Sobhani. He warned that steel plants across the country are currently operating at 60% capacity on average.
Steel industry experts describe imposition of higher import tariffs, elimination of governmental exchange rates for import of steel products, modification of iron ore prices and stability in utility costs as the legitimate expectations of domestic steelmakers.
