Steel producers are struggling with a glut in both domestic and international markets. Some analysts believe the manufacturers have no option but to reduce production, arguing that keeping production at the current level would only lead to higher surplus and hike in the producer price index, Foolad-News reported.
But despite the excess production and low demand, many steelmakers are against the idea of lowering production. They have been trying to convince the government to further limit imports, while at the same time lowering their prices to stimulate demand.
Meanwhile, some steel industry experts believe the prices have already reached their lowest level in the domestic market.
The slump in global steel prices and high labor and fuel costs in the country have also reduced the competitiveness of domestic steel producers in the global markets, according to manager of Arfa Iron and Steel Company Mohammad Hassan Nassouhian.
“Shutting down steel production plants is obviously not the solution. The best possible options are to either reduce prices or find new export markets,” he said.
Meanwhile, Mohammad Reza Baniasadi, managing director of South Kaveh Steel Company, believes steelmakers should maintain the same level of production but reduce prices by narrowing their profit margin. “Stacking up the products in depots is neither in favor of the producers nor the industry,” he said.
A member of the Iranian Steel Producers Association, Reza Shahrestani, warned that if no serious action is taken by the government, steel plants will have to close down sooner or later, leaving no options but to import steel.
He noted that while production of 17 million tons of crude steel was planned for the previous Iranian year (ended March 20, 2015), actual production stood at 15 million tons due to low demand. He predicted that production will continue to fall in the current Iranian year to reach about 12.5 million tons.
