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Foreign Steelmakers Eye Iranian Market

Foreign Steelmakers Eye Iranian MarketForeign Steelmakers Eye Iranian Market

Any global steelmakers hoping a potential end to sanctions on Iran will fully revive what was once a multibillion dollar import market for their product will be disappointed as Tehran is boosting local output and expects its own exports to grow.

Iran’s drive to more than triple production to 55 million tons by 2025 is not all bad news for foreign firms though, as some are looking to offer technological help developing steel mills or plants to process iron ore, according to Reuters.

South Korea’s POSCO and a company owned by Japan’s Nippon Steel & Sumitomo Metal Corp are among companies gearing up to sell steel to Iran, as international producers scour the world for new customers amid faltering demand from top buyer China.

But Iranian mills have been quietly stepping up production in the face of plunging imports since sanctions were imposed around a decade ago over Tehran’s nuclear program, with World Steel Association data showing crude steel output has already grown 60% from 2007 to 16.3 million tons in 2014.

“Years ago, Iran was importing 10-12 million tons. We will never see those figures again, I can say with certainty,” said Bahador Ahramian, a board member of the Iranian Steel Producers Association.

“We already have a surplus here,” he added, putting that at 3 to 4 million tons this year.

Iran’s steel imports dropped to 4.5 million tons last year from 12.2 million tons in 2007, when the country was the biggest overseas buyer in the Middle East, according to the association’s data and the International Steel Statistics Bureau. The 2007 imports would be worth nearly $7 billion at current prices.

Ahramian added that scrapping sanctions would increase the country’s access to international trade finance, helping ramp up steel exports.

Iran expects those exports, from companies such as its top shipper Mobarakeh Steel Company, to double to 4 million tons in the year to next March, said Mehdi Karbasian, deputy minister for industries, mining and trade. It plans to increase that to 10 million tons by 2025.

  “Very Important Market”

The United Nations endorsed a deal in July to end years of economic sanctions on Iran, but they are unlikely to be removed until next year.

A major carmaker that also needs steel to develop its vast energy sector, Iran consumed 17.3 million tons of the alloy last year–about a third of the amount used in the entire Middle East.

A source familiar with POSCO’s marketing strategy said Iran was a “very important market” for the world’s No.5 steelmaker and that it would reenter the country as soon as sanctions were lifted. POSCO sold more than 200,000 tons of steel to Iran before sanctions were imposed, the source said.

Abu Bucker Husain, chief executive of Al Ghurair Iron & Steel from the United Arab Emirates, a maker of galvanized steel co-owned by world No. 2 steelmaker Nippon Steel & Sumitomo Metal, said the Iranian market could be significant for the company.

Meanwhile, Russia’s TMK, among the world’s top suppliers of steel pipes for the oil and gas industry, said it would resume pipe deliveries to Iran when sanctions are lifted.

ArcelorMittal, the world’s biggest steelmaker, was more sanguine on prospects for business in Iran, even though it is already selling steel to trading companies that export to the nation.

However, opportunities exist beyond simply selling steel. POSCO has said it was in contact with several Iranian firms on providing technology, while Finland’s Outotec has won a contract to supply technology for a new iron ore processing plant in Iran.

Financialtribune.com