Economy, Business And Markets

ISMC 2016 Agenda Streamlined

Business & Markets Desk
ISMC 2016 Agenda Streamlined
ISMC 2016 Agenda Streamlined

The iron ore and steel sector is undergoing a major transformation.

China, the world’s largest steel producer, is grappling with a lingering slump in domestic demand. Its strategy is to continue production and dump the surplus steel products through rampant exports.

The move, which has “upset the balance of global steel markets”, according to steel industry experts, has in turn affected the iron ore sector.

In order to feed its behemoth steel industry, China requires an immense amount of iron ore and considering that the country’s domestic iron ore production costs have crossed the economic redline, the industrial giant has opted for large-scale imports of iron ore.

Consequently, this has caused the global iron ore producers to dramatically cut down on their production costs to meet China’s iron ore demand.

The unfavorable global outlook, coupled with falling oil prices and the dwindling construction sector in Iran, calls for a gathering of experts, industrial players and government officials to address this critical situation.

With this outlook in mind, Financial Tribune’s sister newspaper Donya-e-Eqtesad will host the Sixth Iranian Steel Market Conference in Tehran on February 16-17, 2016, with top official from Iranian industries, major domestic steel producers and global giants set to attend the annual conference.

Donya-e-Eqtesad CEO Alireza Bakhtiari, the conference manager, Mohsen Parvan and top officials of the country’s iron ore and steel sector gathered at the Ministry of Industries, Mining and Trade’s headquarters on Thursday to meet Industries Minister Mohammad Reza Nematzadeh to exchange views on the conference’s guidelines and perspectives.

Bakhtiari, the first speaker at the meeting, referred to the achievements of last year’s conference and said the previous ISMC conference accurately forecast the current slump in the steel industry and the unprecedented drop in iron ore prices.

"Furthermore, the ISMC 2014 forecasted that there would be a crisis in terms of steel product prices for domestic producers and that cheap, low-quality Chinese products would flood the Iranian market," he said.

"The previous conference was attended by more than 1,100 iron ore and steel industry players while 13 top officials addressed the gathering."

According to Bakhtiari, key issues on the upcoming conference's agenda include reviewing the progress of domestic iron ore and steel projects and introducing them to potential foreign investors, analyzing the causes of steel market slump, meeting new foreign players interested in entering the Iranian market and striking cooperation deals.

The main speakers of the conference, according to Parvan, will be Peter F. Marcus, the managing partner of World Steel Dynamics for strategic information service and a steel securities analyst; Yang Zuqing, deputy chairman of China Iron and Steel Association, overseeing the production of more than 54% of the world’s steel, who will be accompanied by a 20-strong Chinese trade delegation made up of the country’s key steel companies; Burkhard Dahmen, president and CEO of the German SMS Group, a global leader in plant and mechanical construction for metallurgical process chain; Gianpietro Benedetti, CEO of Italy’s Danieli Company, one of the world’s largest supplier of equipment and plants in the metal industry; Tae-Hyun Hwang, president and CEO of Korea’s POSCO E&C Company, the fourth largest steel producer in the world; Pavel V. Shilayeav, the managing director of Russia’s OJSC MMK, the world’s largest producer of steel sheets; Peter Voser, chairman of the board of directors of Switzerland’s ABB Group, one of the world’s largest engineering companies specializing in power and automation; and Roland Kristl, managing director of INTECO Company.

The minister suggested that three themes be added to the conference: the first is focusing on marketing, considering that the country seeks to spur its steel production to 55 million tons based on the 20-Year Vision Plan (2005-25) and needs to export at least 10-15 million tons of this figure.

"The second one is importing modern iron ore and steel production technology by striking cooperation deals with foreign players, as the climate has changed and the sanctions imposed on Iran over its nuclear energy program are soon to be lifted,” he said.

The minister emphasized that the steel industry is currently “too reliant on foreign companies” for providing them with the technology required for production and the only way to be competitive in the current environment is to indigenize technology and cut down on production costs.

Last but not least, the minister suggested adding a specific panel for the steel project’s infrastructure. For instance, Bandar-e Jask, located in Hormozgan Province, “a highly potential location for setting up steel mills”, can benefit from the development of the port’s infrastructure and its introduction to foreigners as a great investment opportunity.

This will benefit the foreign players, as they can both use the Persian Gulf’s water for steel production and also export their goods through international waters.

Another speaker at the meeting, Nasser Taqizadeh, managing director of Golgohar Mining and Industrial Company, pointed to the 19th Middle East Iron and Steel Conference recently held in Dubai and said Iran, as a major iron ore and steel player, should be the one “calling the shots in the region.”

Bahram Shakouri-Rad, deputy chairman of Iron Ore Producers and Exporters Association, said competitiveness is one of the most important points that needs to be discussed in the conference.

“Demand for any product never drops to zero, even during the worst recession,” he said. "In such a situation, global giants such as Rio Tinto, Vale and BHP take up the largest share of the iron ore market and make it considerably harder for smaller players to survive.

Shakouri-Rad emphasized that in the post-sanctions period, attracting foreign investments for developing the industry’s infrastructure is much more important than trying to increase production figures.

“If we do not look beyond our borders, cut down on production costs and become more competitive, the domestic iron ore and steel industry is doomed to fail,” he said.