Major Iranian Steelmakers Export Over 2m Tons

Major Iranian steelmakers exported 2.13 million tons of semi-finished and finished steel products during the first four months of the current fiscal year (March 21-July 22), registering a 3% growth compared with last year’s corresponding period, Iranian Mines and Mining Industries Development and Renovation Organization reported.

The export volume for Tir, the fourth month of the year (June 22-July 22), stood at 550,362 tons, up 5% year-on-year.

The IMIDRO data released on Monday featured in a preliminary report on major producers’ exports. A more comprehensive and detailed version, including smaller private mills’ performance, is often released in two weeks' time by the Iranian Steel Producers Association.

> KSC Remains Biggest

Khouzestan Steel Company was the biggest exporter for the period, as it shipped 925,289 tons of slab, bloom and billet overseas, up 48% YOY.

Bloom exports made up the bulk of KSC's shipments with 512,430 tons and were up 188% YOY. The company's billet exports, however, were down 61% to 127,626 tons. Slab shipments remained unchanged at 285,233 tons.

KSC’s exports during the fourth month dropped 16% to 115,880 tons.

KSC became Iran’s largest exporter of steel last year (March 2016-17) by shipping 1.9 million tons, overtaking Iran's largest steelmaker Mobarakeh Steel Company for the first time. The company shipped about 52% of its 3.6-million-ton output for the year with its profits jumping over 300% compared to the year before to 6.7 trillion rials ($176.31 million).

> ESCO’s Lifeline

Esfahan Steel Company was the second biggest exporter during the four months with 475,975 tons of beam, rebar, coils and other products shipped overseas, up 122% YOY.

Rebar made up 64,811 tons of MSC's overall exports, registering a 66% growth YOY, followed by beam and coils with 45,139 tons and 17,124 tons respectively. Beam shipments were down 1% YOY, while coil exports remained unchanged. Steel products listed as "others" made up 348,901 tons of exports, up 169%.

ESCO shipped a total of 114,688 tons during the fourth month, up 430% YOY. It is Iran’s oldest steelmaker and one of the country’s largest producers of structural steel. It was jointly established in 1965 by Iran and the Soviet Union’s Tyazhpromexport Company.

The major long producer company seems to be on the path to growth. The 3.3-trillion-rial ($873 million) company had forecasted a 35-rial loss per share for the fiscal 2017-18, but ended up posting only 20 rials in losses per share by the end of first quarter.

According to ESCO Managing Director Ahmad Sadeqi, the reduced loss per share was made possible by replacing local coal supply with cheaper foreign offerings, cutting production costs by boosting efficiency of furnaces, reducing furnaces’ coking coal usage, reviving an old DRI plant and halting scrap iron purchases and cutting the number of project contractors.

The company has also changed some of its sales strategies, as is evident in its balance sheet. Its advances were on the rise during the first quarter, which is due to increased futures sales.

ESCO seems to be the only steelmaker in Iran still focused on exports, as "prioritizing the local market" is the phrase echoed by basically all industry officials these days, making them shy away from their export-oriented policies of last year.

It is explainable, considering that demand for long steel has not yet picked up in the local market in contrast to flats. The trend is unlikely to change for the foreseeable future with the construction sector in a chronic recession.

> MSC Prominence Wanes Among Exporters

Mobarakeh Steel Company, Iran's biggest steelmaker, is dropping further in prominence among the industry’s exporters.

MSC was overtaken by Hormozgan Steel Company, a considerably smaller scale producer. HOSCO was the third largest exporter for the four-month period, as it shipped 355,559 tons of slabs, registering a 3% decline YOY. The steelmaker's output for the fourth month was up 71% and reached 188,519 tons.

Mobarakeh took the fourth spot, as it exported 290,425 tons of hot and cold-rolled, acid-washed, tin-plated, coated, checkered and galvanized flat steel during the four months, down 64% YOY.

Similar to the first quarter, the export of all MSC commodities saw a decline in double digits, excluding coated coil and slab exports, which rose 188% and 38% to 1,742 and 179,176 tons respectively.

MSC exported 117,338 tons during the fourth month, down 50% YOY.

Reduced exports for MSC mean a rise in domestic sales as production grows. Statistics released by MSC at Tehran Stock Exchange indicate local sales were robust across the entire spectrum of products.

“If the local market demand stays at this level, exports will not increase. If they cannot absorb our supplies, however, we will definitely expand overseas shipments,” MSC Chief Bahram Sobhani was quoted as saying by Chilan.

Together with its subsidiaries, MSC is the largest flat steel producer in the Middle East and North Africa region, accounting for 1% of Iran’s GDP.

> Other Producers

Khorasan Steel Company came next, as its rebar exports rose 37% to 46,731 tons. The company’s exports in the fourth month stood at 12,140 tons, posting a 27% drop YOY.

Iran Alloy Steel Company was next with 35,582 tons of rebar up 47% YOY. Its exports during the fourth month were up 284% to 3,672 tons.

Khouzestan Oxin Steel Company was next with 3,320 tons of plates, down 50% YOY. It exported 165 tons in the fourth month, down 94% YOY.

As part of the 20-Year Vision Plan (2005-25), the Iranian steel industry is targeting to become the world’s sixth largest steelmaker by reaching an output capacity of 55 million tons per year by 2025.

According to experts, Iran has to export at least 15 million tons by then to keep such a massive production volume economically viable.

Exports are expected to reach 8 million tons in the current fiscal year, which ends on March 20, 2018, according to Iran's Industries, Mining and Trade Minister Mohammad Reza Nematzadeh.

Iranian steelmakers exported over 3.74 million tons of semis and 1.79 million tons of steel products in the last fiscal year, registering a 108% and 16% growth respectively compared to the preceding year, according to Iranian Steel Producers Association.