60121
Rebounding global steel prices, rising local demand and domestic producers’ inability to sustain an adequate supply have been cited as the reasons behind the proposal to lower tariffs.
Rebounding global steel prices, rising local demand and domestic producers’ inability to sustain an adequate supply have been cited as the reasons behind the proposal to lower tariffs.

Steel Producers Oppose Plans to Cut Import Tariffs

Plans are underway to cut down duties on less than 0.5 mm thick cold-rolled coils and less than 0.3 mm hot-rolled coils from 20% to 10%, and semi-finished non-alloy iron and steel products with less than 25% carbon (such as billets, blooms and slabs) from
Cutting import duties on billets, blooms and slabs will take the limited number of producers still afloat to the brink of bankruptcy

Steel Producers Oppose Plans to Cut Import Tariffs

Iran Steel Producers Association has voiced its opposition to plans to reduce import tariffs on a number of steel products in an open letter to the First Vice President Es’haq Jahangiri last week.
According to the association, the letter was written in reaction to the Minister of Industries, Mining and Trade Mohammad Reza Nematzadeh’s suggestion to Jahangiri back in December, Bourse Press reported.
Nematzadeh called for reducing duties on less than 0.5 mm thick cold-rolled coils and less than 0.3 mm hot-rolled coils from 20% to 10%, and semi-finished non-alloy iron and steel products with less than 25% carbon (such as billets, blooms and slabs) from 15% to 5%.
Rebounding global steel prices, rising local demand and domestic producers’ inability to sustain an adequate supply have been cited as the reasons behind the industries minister’s proposal.
Iran Trade Promotion Organization’s Article One Commission, which comprises representatives of the ministries of industries, agriculture and economy, as well as those of the Central Bank of Iran and Iran Chamber of Commerce, Industries, Mines and Agriculture, has agreed to the minister’s proposal.
The government has yet to announce when the new rates will come into force.
“The supply of flat steel in the domestic market is slightly lower than demand, which can be balanced by imports,” said deputy minister of industries, mining and trade, Jafar Sarqeyni. 
“The cessation of Chinese steel dumping has prompted the government to lower the tariff wall.”
The new duty rate would mark the first reduction of tariffs since January 2016.
Addressing the first vice president, Iran Steel Producers Association described Nematzadeh’s proposal as “uninformed” and “unprofessional”. 
The association criticized the government for making sensitive decisions regarding the industry without consulting the association and called for a revision of the plan before it is enacted.
At present, import duties are set at 15% for semi-finished products, 20-26% for flat products (excluding stainless steel) and 26% for most long products, including I-beams and H-beams.

  Risk of Bankruptcy
Iran Steel Producers Association claims the main motive of the Industries Ministry for lowering tariffs is to meet the flat steel demand of Tavan Avar Steel Industries Company–one of Iran’s largest producers of tin-plated sheets and plates based in Chaharmahal-Bakhtiari Province and a member of the association.
“This is while the new tariff codes proposed [by the ministry] include other grades of CRC with less than 0.5 mm thickness, the producers of which are operating at less than half their actual capacity due to depressed local demand,” reads the letter.
The association suggested splitting tariff codes on less than 0.5 mm thick coils into two new sections: duties on 0.3 mm thick CRC to be halved to 10% and more than 0.3 thick coils to retain their 20% levy.
It also criticized the proposal to lower duties on slab and ingot imports, while Iran’s 5-million-ton slab output capacity is more than double the local demand.
Iranian billet and bloom producers are operating at 60% of their nominal capacity.
The association said the reduction in import duties on billets, blooms and slabs will take the limited number of producers still afloat to the brink of bankruptcy. It called on Jahangiri to return the proposed plan to the Industries Ministry for more expert analysis through talks with representatives of the private sector.
  Producers on Alert 
Lowering the steel tariff bulwark will hurt local producers, says Aziz Qanavati, managing director of Kashan Amir Kabir Steel Company. 
The company is a subsidiary of Iran’s largest steelmaker, Mobarakeh Steel Company, and a producer of galvanized sheets.
“Most Iranian industries are still using old production technologies and have high production costs. Consequently, we cannot compete with foreign offerings due to their lower prices,” he said.
Iranian steel mills produced 17.89 million tons of crude steel in 2016, registering a 10.8% growth compared with the previous year, according to World Steel Association. 
The data also show Iran’s steel sector registered the sixth fastest growth in the world after Serbia, Pakistan, Greece, Libya and Macedonia.
Furthermore, the country’s major steelmakers exported over 4.12 million tons of crude steel and steel products in the nine months to December 20, registering a 55% growth compared with last year’s corresponding period, according to IMIDRO.
Zakariya Nayebi, the head of research and development at Fulad Nab Tabriz Company, also doubled down on Qanavati’s remarks.
“We are grappling with a crisis right now. Lowering import duties will worsen the situation,” Nayebi declared, adding that the construction sector is still stagnated and demand is depressed.

  Pipe, Profile Manufacturers to Benefit
Despite the criticism leveled by Iran Steel Producers Association, the move to reduce import tariffs is regarded as a positive development for domestic steel industry’s downstream sectors, especially Iran’s Syndicate of Steel Pipe and Profile Manufacturers who had to shoulder the brunt of market pressure.
“The industries minister finally saw eye to eye with the syndicate. What we ask next is to implement the new tariffs as soon as possible to save the market from recession and high prices,” said the syndicate secretary, Amir Hossein Kaveh.
Kaveh, who is also a member of Iran Chamber of Commerce, Industries, Mines and Agriculture, criticized the government for dragging its feet.
“For the past year, we maintained our position that high tariff rates will hurt local producers. What we had to do all along was limiting raw material exports and manufacturing high value-added products,” he said.
He also slammed Iran’s major flat steel producers for not being able to supply the local market and prioritize exports. 
This is while global steel prices are steadily rising, which will make it even harder for steel pipe and profile manufacturers to meet their requirements.
As a case in point, Mobarakeh Steel Company reached an agreement with the syndicate back in March to supply them with 600,000 tons of 2-mm sheets and 200,000 tons of less than 2-mm hot-rolled coils during the first half of the current fiscal year (March 20-Sept. 21). 
According to Kaveh, MSC failed to live up to the agreement, leaving syndicate members high and dry.
Together with its subsidiaries, MSC is the largest flat steel producer in the Middle East and North Africa region and Iran’s largest steelmaker, 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 in domestic flat steel consumption, which stood at about 7.5 million tons in the last fiscal year.

Short URL : https://goo.gl/D9ekwm
  1. https://goo.gl/zcOmSS
  • https://goo.gl/UodUih
  • https://goo.gl/eF6j5t
  • https://goo.gl/hb23Uy
  • https://goo.gl/cof5l3

You can also read ...

The share of Iranian railroads in steel transportation is one-third.
There were high hopes for the Iranian mining industry after...
To moderate bank interest rates, the central bank has established links with the Securities and Exchange Organization.
CBI Governor Valiollah Seif has named the newly-formed cordial...
Interbank Transactions Top $800 Billion
Iranian interbank transactions during the fiscal year to March...
New Veep for Economic Affairs
President Hassan Rouhani appointed Mohammad Nahavandian as his...
Amazon, Ebay Purchases Via Third Party Website
A payment facilitation website called ‘Laklak’  (meaning stork...
Tehran to Host 1st Int’l Halal Confab in December
The First International Halal Conference is scheduled to be...
Carpet Exports Exceed $70m in 3 Months
Around $74 million worth of machine-woven carpets were...
Computer Algorithm Maps Brain for First Time
A US research team for the first time has developed a computer...

Add new comment

Read our comment policy before posting your viewpoints

Image CAPTCHA
Enter the characters shown in the image.

Trending

Googleplus