Economy, Business And Markets

MSC Plans Expansion, Shifts Focus to Domestic Market

Bahram Sobhani, managing director of Mobarakeh Steel CompanyBahram Sobhani, managing director of Mobarakeh Steel Company

Iran’s largest industrial complex plans to increase its annual steel production capacity to 10.3 million tons by the end of the current fiscal year (March 20, 2017), says Bahram Sobhani, managing director of Mobarakeh Steel Company.

MSC is betting on a new continuous casting machine with a 1.8 million-ton annual production capacity for its expansion plans.

Continuous casting, also called strand casting, is the process whereby molten metal is solidified into a “semi-finished” billet, bloom, or slab for subsequent rolling in the finishing mills. It allows low-cost production of metal sections with high quality, due to the inherently low costs of continuous, standardized production of a product, as well as providing in-depth control over the process through automation.

According to Sobhani, MSC is also counting on the conclusion of other projects for its expansion.

These include a pellet-making plant near the Afghan border with a 5 million-ton annual output capacity and a 5 million-ton iron ore concentrate plant at Sangan mineral zone in Khorasan Razavi Province.

Together with its subsidiaries, MSC is Iran’s largest steelmaker and flat steel producer, accounting for 1% of Iran’s GDP. The company accounts for approximately 50% of the country’s total steel output and also holds the same share from domestic flat steel consumption, which stood at around 7.5 million tons in the last fiscal year (ended March 20, 2016).

The company produced about 5.5 million tons of flat products, with 70% of this volume allocated for the local market over the year.

MSC exported 1.07 million tons of steel and steel products during the first half of the current fiscal year, up 44% compared with last year’s corresponding period, according to Iranian Mines & Mining Industries Development & Renovation.

The company’s monthly export performance, however, took a hit in the sixth month of the year as shipments dropped by 52% to 88,664 tons.

Moreover, MSC and its subsidiaries produced over 3.6 million tons of crude steel and 2.8 million tons of steel products during the six-month period, nearly the same as in last year’s similar period.

Increased domestic demand for hot-rolled coil steel has prompted the sole Iranian exporter of the industrial material to shift its focus on sales strategy to the domestic market while trying to capitalize on the improved local demand.

“The priority of Mobarakeh Steel Company is to supply Iran’s downstream manufacturers, while export is of secondary importance,” said Mahmoud Akbari, the deputy head of sales at MSC.

Currently, the biggest consumer of MSC products in Iran is the pipe and profile industry, according to Metal Expert, a Ukraine-based steel market analysis firm, which added that MSC is developing products to supply Iran’s oil and gas industry and is now able to produce API grades of flat products, including X60, X65 and X70.

HRC export sales from Iran have been decreasing since July due to the slight recovery in the local market and the start of antidumping investigation in Europe.

The last tender was opened at a high price of about $480 per ton FOB Europe and $410 per ton FOB Middle East in early October.

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