Economy, Business And Markets

ISMC 2015: Revisiting Iran’s ‘Alluring’ Steel Market

ISMC 2015: Revisiting Iran’s ‘Alluring’ Steel MarketISMC 2015: Revisiting Iran’s ‘Alluring’ Steel Market

The 5th Iranian Steel Market Conference (ISMC 2015) has opened in Tehran today. Participants include top officials from Iran's industrial circle, major domestic steel manufactures as well as three global steel giants from Spain, Italy, and Germany.

The three foreign steel companies participating in the conference include the Italian Danieli, one of the three largest suppliers of equipment and plants in the metal industry, the German SMS Group, a global leader in plant and mechanical construction for metallurgical process chain, and the Spanish Sarralle, specialized in engineering, design and manufacture of heavy equipment, the Persian economic daily Donya-e-Eqtesad reported.

The presence of top officials from China Iron and Steel Association in the two-day event further underlines the importance of ISMC as one of the most prominent steel industry conferences in Iran.

Elias Gonzalez Gil, the managing director of Sarralle, described Iran's steel industry as an "alluring market," saying, "Iran's abundant energy reserves, inexpensive labor force, ample iron ore resources, and a strategic geographical location make it an alluring steel market."

According to Sarralle's manager, the Spanish company entered the Iranian market nine years ago and established a joint company named Pars Sarralle. "The joint company is the only registered engineering, procurement and construction (EPC) contractor in Iran which has managed to supply parts and equipment to major Iranian steelmakers. The company has also signed contracts to execute EPC projects in collaboration with steel manufacturers in the southern port city of Bandar Abbas, the central city of Yazd, and Arvand in the southwestern province of Khuzestan," he informed.

Sarralle Company provides smelting units, rolling lines, coil processing lines, smart storage systems, and energy optimizing systems to Iran's steel companies.

"But despite much potential in Iran's steel sector," Gonzalez Gil believes Iran's steel industry still faces the challenge of high production cost, which he believes results from "outdated machineries and old technologies, high energy wastage, sub-standard raw material, and unpredicted breaks in the production process."

Lately, Iran has been making huge investments in the steel sector in line with its 2025 Vision Plan which sets an ambitious goal of producing 55 million metric tons of steel per year, some 38 million tons up from its current production rate. In order to feasibly reach the goal, the country's steel industry needs to sustainably minimize the production costs.

The recent European countries' comeback following the partial lifting of anti-Iran sanctions – as part of the interim deal Iran reached with the P5+1 (the  five permanent members of the UN Security Council plus Germany) in Geneva in November 2013 – has generated new hopes among the domestic steelmakers that they can once more take advantage of modern technologies and expertise offered by the global leaders in the industry.

Under the tight sanctions imposed on Iran, steel manufacturers have been unable to import machinery, equipment and parts. Although the steel industry was not directly targeted by the sanctions, the banking and financial restrictions posed major obstacles for the sector in both import of machineries and parts and export.

The ISMC 2015 has been assessed by analysts in the steel market as a golden opportunity for Iranian steel manufacturers to restart interacting with the global leaders.

Following the Geneva nuclear deal, foreign investors have been showing interest in different sectors of Iran's steel industry; including iron ore exploration and extraction, manufacturing iron ore concentrate and iron ore pellets, as well as finished products such as steel and direct-reduced iron (DRI), and other downstream industries.

Gonzalez Gil, as managing director of a company which has an active presence in eight major steel producing countries in world, believes Iran's steel industry "will undoubtedly become one of the safest options for investment," and invites all foreign companies and investors to "come and see the reality for themselves."