Economy, Business And Markets

Iran’s Largest Steel Exporter Sets Record

KSC is targeting to export 2.2 million tons of steel by the end of the current fiscal year (to end March 20, 2018)
Khouzestan Steel Company exports to 13 countries.
Khouzestan Steel Company exports to 13 countries.
Khouzestan Steel is looking to purchase controlling stakes in one of Iran’s largest rolling plants, Khouzestan Oxin Steel Company

Khouzestan Steel Company has set a record in exports by shipping over 1.92 million tons of steel products in the current fiscal year (started March 21), the company's manager said.

KSC, as Iran’s largest steel exporter, registered its highest shipment record ever last fiscal year by exporting 1.9 million tons of products.

“Khouzestan Steel is targeting to export 2.2 million tons of steel this [fiscal] year,” Mohammad Keshani was also quoted as saying by IRNA.

KSC produced 3.6 million tons of steel products last year and is targeting to reach 3.7 million tons by March 2018.

Latest statistics released on indicate that KSC produced 2.5 million tons of slabs, blooms and billets during the first eight months of the current fiscal year, indicating a 7.34% year-on-year growth.

Slab production grew 5.26% YOY to 899,522, and bloom and billet output notched up 8.55% to 1.6 million tons.

KSC produced 4.29 million tons of pellets during the eight-month period. The product is mostly used for feeding the company’s output, while a small chunk of it is sold on the local market.

The company’s sales volume and value for the period reached 2.69 million tons worth 40.11 trillion rials ($955.1 million), indicating a 13.7% and 44% growth YOY respectively.

The eighth month of the year, Aban (Oct. 22-Nov. 21), witnessed KSC upping its output by 2.15% to 316,062 tons. Sales volume for the period, however, dropped 13.8% to 244,277 tons. This was more than offset by the 36.44% jump in sales value to 4.78 trillion rials ($113.99 million).

The company’s notable performance also positively affected its stocks’ standing at Tehran Stock Exchange, and buoyed its shares alongside other base metal producers as global prices continue to grow.

With a current market capitalization of 67.32 trillion rials ($1.6 billion), each KSC share closed Wednesday trade at 4,652 rials, a 4.38% growth for the day. Its share price has grown 42% since March 25.

With an earnings per share of 812, KSC’s price to earnings ratio stands at 5.73, well below the base metal group’s average P/E of 6.66.

The steelmaker, located in the southwestern Khouzestan Province, exports to 13 countries. About 50% of the exports are shipped to the Middle East and North Africa region, 40% to the Far East and around 10% to countries in Americas.

> KSC Eyes Purchasing Oxin Steel

With increased revenues come expansion plans and KSC is reportedly looking to purchase controlling stakes in one of Iran’s largest rolling plants, Khouzestan Oxin Steel Company.

“[Iranian] steelmakers are aiming to expand their reach in the production chain. Accordingly, we are aiming to acquire a mine and a rolling mill, while we aim to purchase Oxin Steel,” Keshani was quoted as saying by Madan 24.

Located in the southern Khuzestan Province, Oxin is Iran’s biggest producer of heavy plates. It is the only local producer of heavy steel plates and is able to produce it in widths of 1,100-4,500 millimeters with a thickness of 8-150 mm. It produced about 650,000 tons of steel products in the last Iranian year (ended March 20, 2017). About 30,000 tons of this was exported, mainly to Germany, Italy, Belgium and the Netherlands.

Oxin Steel can be the perfect asset for KSC, considering the plants’ close proximity and KSC’s high semi-finished steel output.

“Khouzestan Steel is a producer of ingots and slabs. It can process them into flat products in a rolling plant, such as Oxin, at very competitive prices," Keshani said.

The acquisition of Oxin will boost KSC’s output capacity by 2 million tons.

There is another heavyweight contender vying to buy the rolling plant, however. Mobarakeh Steel Company’s Managing Director Bahram Sobhani made a bid for Oxin back in late November.

“We are currently negotiating the purchase,” Sobhani was quoted as saying by Bourse 24. “As a large-scale mining and steel complex, MSC’s expansion is our priority.”

He added that the company is aiming to buy or establish steel plants in close proximity of free waters of Persian Gulf. MSC already has a subsidiary, Hormozgan Steel Company, which operates in the southern region.

The Isfahan-based steelmaker currently has controlling stakes in more than 20 steel mills and investment holdings.

Together with its subsidiaries, MSC is the largest flat steel producer in the Middle East and North Africa region and Iran’s largest steelmaker, supplying 20% of the region’s steel demand and accounting for 1% of Iran’s GDP.

Keshani, however, believes that Oxin is an asset better suited for KSC’s portfolio.

“We are bidding, and so are others . . . [but] we can [produce flats] at lower prices using Oxin. Transportation costs will also be higher for others [located outside Khozuestan province]. The relative advantage here is certainly KSC’s,” said Keshani.

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