Economy, Business And Markets

Steel Exports Surge Despite Domestic Downturn

Steel Exports Surge Despite Domestic DownturnSteel Exports Surge Despite Domestic Downturn

Steel industry was one of Iran's primary industrial sectors to benefit from the lifting of sanctions imposed on the country over its nuclear energy program, as part of the July 14 nuclear accord reached with world powers.

Access to modern production technologies and the reopening of international markets to Iran at a time of slump in the domestic steel market enabled Iranian steelmakers to double their crude steel exports last year.

About 1.8 million tons of crude steel were exported in the last Iranian year (March 2015-16), indicating a 200% surge compared to a year before, Iran Steel Producers Association reported on its website.

About 1.7 million tons of steel sheets and 302,000 tons of billets were exported in the same period, recording an 11% and 22% rise respectively.

According to the report, Iranian crude steel stockpiles have already depleted, thanks to last year's booming exports. Inventories will soon be replenished, however, as despite the global rout in steel production by nearly all major global steelmakers, Iran posted a robust rise in crude steel output in the first four months of 2016.

According to data from World Steel Association, over 5.5 million tons of crude steel were manufactured in Iran from January to April, indicating a 1.5% growth compared to the corresponding period of 2015.

Also, the output in April stood at its monthly high of 1.5 million tons, up 7.8% compared to last year's similar month.

This is while Iranian steel mills also set a new record by exporting more than 4.1 million tons of steel products valued at about $7 billion last year, indicating an over 4% rise in terms of volume compared to a year before, according to Mehdi Karbasian, deputy minister of industries, mining and trade.

Karbasian, who is also the head of Iranian Mines and Mining Industries Development and Renovation Organization, had previously predicted that steel exports would reach a record high of 3 million tons by the yearend.

"The achievement (last year's record exports) shows that Iranian producers managed to weather the steel crisis, amid faltering demand in the domestic construction sector and the glut in global markets caused by the dumping policies of China and Russia," he was quoted as saying by IRNA.

He also pointed to the hike in tariffs set on steel imports this year and the relatively unchanged energy prices as two of the primary incentives for steelmakers to further embark on exports.

The revised import tariffs, meant to protect the domestic industry against the Chinese dumping onslaught and approved by the government Cabinet during the first days of the current year, included a 5% hike for steel ingots to 15%; a 10% jump for hot rolled sheets to 20% and a 10% rise for plated steel sheets to 20%.

Iran aims to become the world's sixth largest steel producer as per its National Vision Plan (2005-25), which stipulates the production of 55 million tons of crude steel per year.

Experts believe the ambitious target is feasible, as the domestic industry is required to export close to 20 million tons annually.

However, they contend that the domestic infrastructure does not allow for the export of more than 7 million tons per annum. This is something the government is expected to address.