Iranians Cut Longs Production to Boost Prices

Depressed domestic prices for longs and poor demand in the Iranian market are forcing local steel producers to adjust to severe conditions.

While some of them, who have already succeeded in forging cooperation with foreign customers, focus on exports, others decide to cut production, Metal Expert reported.

Most Iranian long steel producers have agreed to reduce their output by around 20%, according to Iran’s Steel Producers Association.

The main reason is low prices amid market oversupply and poor demand for construction steel in the country.

Currently, domestic prices for long steel products are at least $150/ton higher than for flats.

“This is a really unprecedented gap between the long and flat products’ prices. The typical difference is around $30‑50/ton in the world market,” an ISPA representative told Metal Expert.

First of all the production cuts will affect re-rollers, especially those who have big stocks. Khorasan Steel Complex is among large steel mills that have agreed to reduce output. The company is planning to switch to billet production and is aiming to sell larger volumes of semis, on export as well.

At the same time, Esfahan Steel Company, one of Iran’s three main exporters, is unlikely to follow the common trend.

“ESCO will not reduce production. Instead, they will look for export of rebar and beam,” a source told Metal Expert.