Economy, Business And Markets

70% of Steel Pipe Production Capacity Unused

70% of Steel Pipe Production Capacity Unused70% of Steel Pipe Production Capacity Unused

About 70% of Iran’s 4-million-ton steel pipe manufacturing capacity is unutilized due to weak domestic demand, according to member of the Syndicate of Steel Pipe and Profile Manufacturers Hadi Tarshizi. Major construction projects over the past decade, the controversial ‘Mehr Housing Scheme’ in particular, led to pipe and profile producers dramatically boosting their output to meet growing demand, he said. The slowdowns and delays on the major housing project diminished domestic demand for steel pipes and currently producers operate at a maximum of 1.5-million ton-per-year output, ISNA reported. Mehr Housing Scheme is a large-scale construction program initiated in 2007 by the former president Mahmoud Ahmadinejad to provide two million low-cost homes through free land and cheap credit. After initially causing a boom for domestic manufacturers of construction materials, including steel pipes, the plan slowed down due to lack of funding, which in turn dragged down domestic demand for construction material. Plummeting oil prices have further contributed to low demand for construction materials as revenues decline the government is forced to cut spending, including on urban development and construction projects.