Economy, Business And Markets

Resolution to Increase Steel Production

Resolution to Increase Steel ProductionResolution to Increase Steel Production

The country exported more than 1.3 million metric tons of steel during the first nine months of the current Iranian year (which started March 21, 2014), according to IRNA’s Monday report.

Out of the amount, some 1 million metric tons were exported by Mobarakeh Steel Company, while Hormozgan’s share was 230,000 metric tons and 100,000 metric tons were exported by other companies, said Bahram Sobhani, a member of board of directors at Hormozgan Steel Company and the head of Iranian Steel Producers Association (ISPA).

The 1.3-million-metric-ton export in nine months comes as the figure during the entire year 1392 (which ended March 20, 2014) reached 1.25 million metric tons.

Sobhani said the global declines in energy and iron ore prices have faced Iranian steelmakers with serious obstacles. He added that many foreign competitors have benefited from lower iron ore prices, which has put enormous pressure on Iranian steel manufacturers in their regional and global competition.

Declining iron ore prices in the international markets as well as high tariffs levied by the government for iron ore export have considerably decreased the export of the raw material. Iron ore export has continuously been on decline since May, reaching its worst level in October. Average iron ore export, which was 1.1 million metric tons per month during the May-September period, dropped to less than 200,000 metric tons per month in October and the situation got worse in November when only a meager amount of 15,000 metric tons of iron ore was exported, ISNA reported.

Despite all the domestic and international challenges threatening the steel industry, the administration is willing to gradually increase the steel production rate in line with the country’s 2025 Vision Plan based on which at least 52 million metric tons of steel should be annually produced. The hard-to-reach target would only be achieved through comprehensive and integrated plans, at a time when the current production rate is only 18 million metric tons per year.

Seven provincial steel projects each with a production capacity of at least 800,000 metric tons of steel every year– were launched in 2006, but were left unfinished due to budget deficits and obstacles put by the Chinese regarding the letters of credit (LC’s). The current government is now determined to implement these projects after the LC problems have apparently been solved.

Establishing a handful of other steel plants near the coastal areas is also on the government’s agenda. According to government officials, the southeastern port city of Chabahar and also the southern Hormozgan province are the ideal locations regarding their proximity to sea, since water is a crucial element for steel plants. Hormozgan Steel Company, for instance, is expected to increase its annual production to 3 million metric tons by the next three years from the current 1.2 million metric tons.