Economy, Business And Markets

Steel Experts Share Concerns, Insights at ISMC 2016

Steel Experts Share Concerns, Insights at ISMC 2016Steel Experts Share Concerns, Insights at ISMC 2016

The Sixth Iranian Steel Market Conference, also known as ISMC 2016, convened on Wednesday—the second and final day—with international industry players holding specialized workshops and presentations to interact with their Iranian counterparts.

Among the foreign participants were big names, including the Italian Danieli, one of the largest suppliers of equipment and plants; the German SMS Group, world-leading provider of solutions, machinery and services for the metal industries; the Spanish SARRALLE Group, specialized in engineering, design and manufacture of heavy equipment; South Korea’s POSCO E&C, the world’s fourth-largest steelmaker; and INTECO, a supplier of production and processing machinery for the liquid treatment of steel, ferroalloys and super alloys.

Iranians companies like Foolad Technic International Engineering Company, Iran Mercantile Exchange and Iran International Engineering Company also held workshops on steel production techniques and investment opportunities in the domestic sector.

> Steel-Iron Ore Interrelation

Diana Kinch, senior editor of Steel Business Briefing, a subsidiary of Platts–the London-based provider of energy and metals information and a source of benchmark price assessments in the physical energy markets–gave a presentation on Wednesday to introduce Platts to the Iranian industrialists and provide them with insight on the global condition of iron ore and steel sector.

Speaking to Financial Tribune on the sidelines of the workshops, Kinch referred to the "15% drop in Iran’s steel production since October" and said iron ore exports also dropped "because of not being competitive against Australia and Brazil".

“The problem is that Iranian iron ore has quite a lot of impurities, mainly phosphorus,” she said.

Pointing to Iran’s steel expansion program—production of 55 million tons of steel per year by 2025—and the raw materials required for realizing the ambitious goal, she said the country needs to boost iron ore production before considering a surge in steel output.

According to Kinch, as far as job creation is concerned in pursuing the abovementioned goal, it can be done in an easier and cheaper manner by importing high quality raw materials and establishing processing plants.


> Need to Develop Railroads

Mohsen Pourseyyed Aqaei, deputy minister of Roads and Urban Development and head of Islamic Republic of Iran Railways, a keynote speaker at the Tehran conference on Wednesday, highlighted the need to expand Iran’s railroads to achieve growth in the steel sector.

“Based on the 20-Year Vision Plan (2005-25), we will need to be able to transport 165 million tons of raw minerals by 2025,” said the official, noting that moving this hefty load by road is highly uneconomical and unreliable.

Aqaei said the IRIR plans to make railroads a more attractive means of transportation for industrialists by removing the current 8% value-added tax on transit and reducing the overall duties from the current 53% to 31%.

“A total investment of $428 million is required to develop Iranian railroads’ aging infrastructure,” he said, adding that the government has considered incentives for those investing in the sector, including complete tax exemption for 10 years.

Aqaei also suggested that steel plants should be merged with their downstream industries and be connected to railroads to reduce final costs, citing the example of Mobarakeh and Khuzestan Steel Company that have successfully implemented the practice.

> Further Tariff Cuts on China Imports

Governmental officials were also present at the two-day conference, with Mohammad Nahavandian, the chief of staff for the president of Iran, vowing full government support for domestic steel industry by all means, on the first day of the event.

Referring to cheap Chinese steel products aggressively dumped in the domestic market, the official said, “Iranian steelmakers have voiced their concerns and we are planning to take action by further increasing import tariffs and adopting other supportive policies.”

Nahavandian added that government studies and forecasts show that demand in construction sector is set to rise in line with the growth in other segments of the Iranian economy in the post-sanctions era.

Speakers on the first day of the conference were unanimous in predicting that the ongoing recession in the global steel industry is expected to continue in 2016 before showing signs of improvement in 2017.

Other noteworthy speakers in the first day included Peter F. Marcus, managing partner and founder of World Steel Dynamics steel information and analytics service; Yang Zunqing, deputy chairman of China Iron and Steel Association,; Gianpietro Benedetti, CEO of Italian Danieli,; Burkhard Dahmen, CEO of German SMS Group; Mehdi Karbasian, head of Iranian Mines and Mining Industries Development and Renovation Organization; Mostafa Moazzenzadeh, advisor to Iran's first vice president; Mohammad Abka, managing director of Foolad Technic International Engineering Company; Hamed Soltaninejad, managing director of Iran Mercantile Exchange, and Bahram Sobhani, chairman of Iran’s Steel Manufacturers Association.

The conference was hosted by Financial Tribune's sister publication, the Persian economic daily Donya-e-Eqtesad.