Economy, Business And Markets

MSC Remains Strong Despite Growing Competition

MSC Remains Strong Despite Growing CompetitionMSC Remains Strong Despite Growing Competition

Together with its subsidiaries, Mobarakeh Steel Company is Iran’s largest steelmaker and flat steel producer, accounting for approximately 50% of the country’s total steel output and holding the same share of flat steel consumption.

According to the company’s report, this figure amounted to 7.5 million tons in the previous Iranian year (ended March 19, 2016).

MSC produced around 5.5 million tons of flat product, with 70% of this volume allocated for the local market, Metal Expert, a Ukraine-based provider of news and analysis on steel products and steelmaking raw materials industries, wrote in a recent report dubbed “Iran in Focus”.

In the coming three years, consumption is expected to reach 13.5 million tons. With the growth of consumption, Iran is likely to see the increase in the number of flat steel producers. If all the announced projects in the country are implemented, the total flats capacity may reach 23 million tons per year by 2019.

Nevertheless, MSC’s position is likely to remain strong as it is changing and developing according to market conditions, diversifying product portfolio to meet the demand. Currently, the company is producing slabs, HRC, CRC, HDG, PPGI and tin plates to cover the needs of all major markets, including automotive, construction, household appliances and packaging.

Last year, the company introduced a number of high value-added products, such as checkered plate for manufacturing industrial stairways, bridges, autos, wagons and ports; high-strength micro-alloyed steel sheets used for trucks production as well as API X42, X52 and X60 grade plates for the pipe industry.

MSC already has a strong position in foreign outlets. With its 1.8 million-ton export volume in the previous Iranian year, it represented little less than a half of the country’s total steel export.

Around 65% of MSC’s products were exported to Europe. Among the main sales outlets are Italy, Spain and Germany. The rest was sold to the Middle East, Far East and Africa.

“Eighty percent of exports are HRC, while remaining volumes are CRC, HDG and PPGI,” the company representative told Metal Expert.

MSC, however, does not exclude the expansion of the product range for export. For instance, the demand for checkered plate in the country is assessed as 100,000 tons per year. Since MSC’s capacity is 200,000 tons, the remaining volumes are planned to be exported.

To remain competitive, MSC is also working over the balancing of the production chain starting with the upstream segments. The producer has recently increased capital to $2.5 billion, which has made it the largest company at Tehran Stock Exchange.

“The recent increase in capital is primarily meant to finance the 5 million-tons-per-year Sangan concentrate and pelletizing plant,” Amir Hossein Naderi, CFO of MSC, said.

This will increase the producer’s pelletizing facilities to 12 million tons and add to its self-sufficiency in this raw material. Moreover, in the coming two years, it plans to expand DRI, steelmaking and hot-rolling capacities.

MSC will also benefit from protective measures against flat product imports.

Despite rather optimistic short-term and long-term outlook for the company, it may face certain threats, such as a lack of investments in Iran, tough competition in the export markets and imbalance of production chain.

On Saturday, MSC’s Managing Director Bahram Sobhani announced a major plan to expand crude steel production capacity from the current 7.7 million tons to 10 million tons per year by the end of November.