Iran Steel Demand Up, Exports Halved

Steel consumption in Iran during the first quarter of the current fiscal year (March 21-June 21) stood at 5.19 million tons, up 20% year-on-year and 323,000 tons more than domestic production, the Iranian Steel Producers Association’s latest report showed.

Apparent finished steel usage was on the rise month-on-month in spring.

Consumption of hot-rolled coil during the three-month period stood at 2.11 million tons, up 24% YOY.  That of cold-rolled coil was at 786,000 tons, up 60%; coated coil at 485,000 tons, up 53%; rebar at 1.44 million tons, down 4%; and beams at 133,000 tons, down 32% YOY.

Iranians steelmakers produced 10.18 million tons of semi-finished and finished steel products in Q1, registering a 13.1% growth compared with last year’s corresponding period.

Finished products, including beam, rebar, cold- and hot-rolled and coated coil, had a 4.87-million-ton share from the total output and registered a 13% YOY growth in production. Hot-rolled coil had the lion’s share with 1.84 million tons, up 3% YOY; followed by rebar with 1.6 million tons, up 5% YOY; cold-rolled coil with 627,000 tons, up 51% YOY; coated coil with 397,000 tons, up 65% YOY; beam with 167,000 tons, down 29% YOY; and “other steel products” with 225,000 tons, up 150%.

Beam production and demand are still unattractive due to the downturn in the construction sector. Consequently, major beam producer Esfahan Steel Company is having a hard time clearing debts accumulated through years of financial hardships.

Steelmakers appear to be comfortable with their export strategies as little has changed compared to the previous two months. Shipment of semi-finished products are still on the rise, HRC and CRC exports have shrunk gradually, and any rebar product in excess of domestic demand is exported.

The export of finished product was down 58% in spring to 300,000 tons. Rebar and coated coil were the only commodities posting growth in shipments, up 175% to 187,000 tons and 22% to 11,000 tons respectively. This is while HRC and CRC exports dropped 93% and 94% to 34,000 and 4,000 tons respectively.

Over 1.69 million tons of semis were exported during the period, up 67% YOY. Slab shipments recorded a 211% upsurge to 944,000 tons, and billet and bloom shipments rose 5% to 751,000 tons.

Imports were down across the whole spectrum of steel products, save for a few. Semi and finished steel imports were down 81% and 14% to stand at 6,000 and 623,000 tons respectively. Beam, CRC and coated coil were the only products recording a rise in imports.

 Demand Rises as Trade Barriers Dampen Exports

The rise in Iran’s apparent consumption was attributed to a pickup in auto manufacturing and other industries, a market source told S&P Global Platts. According to Iran Vehicle Manufacturers Association, 306,545 cars, pickup trucks and heavy duty vehicles were produced during the three-month period, registering a 15.2% YOY growth.

However, improved local demand was not the only factor capable of slowing down the coil-exporting machine of Iran’s largest flat producer–Mobarakeh Steel Company. International trade barriers and allegations of dumping were some of the other contributing factors.

MSC’s HRC exports to the EU have fallen sharply following reports the 28-nation bloc plans to impose a 23% anti-dumping duty on Iranian imports, Platts quoted an ISPA representative as saying.

The European Commission initiated the AD probe back in July last year and is scheduled to announce its definitive decision by October 6 this year.

According to Eurostat’s data shared with Financial Tribune, Iranian mills exported 34,140 tons of steel products to the EU valued at €16.3 million in Q1. Comparing this information with ISPA’s statistics on HRC shipments indicates that most, if not all of the material, headed for Europe and was gradually cut down to not further spook the bloc.

MSC has cut its HRC exports to Europe and elsewhere since January in order to meet domestic downstream industries’ requirements, according to Moji Khojasteh, a London-based trader who mainly exports Iranian steel to Europe.

At present, Iran’s main export is steel slab, not coil, he said, adding that Iran prefers to export more semi-finished products.

MSC also has troubles on the Asian front, as Thailand set definitive AD duties up to 7.25% on its HRC shipments back in May.

The Ministry of Industries, Mining and Trade is planning to boost Iran’s crude steel capacity to 55 million tons by 2025 and become the world’s sixth largest steelmaker. About 60% of the target have been realized so far.

Experts believe over half of the envisioned amount must be exported so that the figure can be feasible. Local demand might not be able to keep up with the capacity-making speed of Iran’s steel machine.

Iran is currently the world’s 14th largest steelmaker, placed between Mexico (13th) and France (15th).