All finished steel products have been removed from the list of mineral products on which heavy export duties were imposed recently, following a letter sent by Director General of Mineral Industries Bureau of the Ministry of Industries, Mining and Trade Seifollah Amiri to the ministry’s Export and Import Regulations Office.
Export duties on steel slab, clinker, ferrochromium, ferrosilicon and iron ore concentrate have been set at 5%.
Steel billet, iron ore pellet, direct reduced iron, alloy steel (ingot), cement and float glass will experience a 2% customs duty while granulated iron ore will see between 5-11%, depending on iron content, Mehr News Agency reported.
Amiri noted that recent changes in export prices of mineral products has been the reason behind the government’s decision to change export duty rates.
Prior to this new decision, the ministry sent a directive to IRICA on April 9 for export duties on mineral products to become effective in the new fiscal year (started March 21). Customs duties were to be imposed on exports of all products along the steel production chain from iron ore to steel ingots and downstream products, as well as base metals, including copper, aluminum and zinc from concentrates to the metal and downstream products, petrochemicals, chemicals, glass, clinker, cement and all kinds of ferroalloys.
“Duties on mineral products constitute a short-term measure taken by the government and are aimed at regulating the domestic market,” Mohammad Sadeq Mofatteh, deputy minister of industries, mining and trade, said earlier.
“By levying customs duties on exports, supply to the domestic market will increase. We have a chart in the Industries Ministry based on which customs duties will be set on exports when domestic and global price difference exceeds a certain threshold,” he was quoted as saying by IRNA.
“The export duties are subject to change in accordance with global price fluctuations. Last week, the duties were reduced because prices in the international market declined.”
Amiri noted that the Industries Ministry will set customs duties on mineral products, which will lead to a price increase of 5% or more in the international markets, but those experiencing a price rise of 0-5% will be exempt.
“In setting customs duties, we take into account the domestic market situation. For some products, the mining industry had no problems supplying the local market so we eliminated the exports duties set on them,” he added.
Strong Criticism
The rate of duties was said to be progressive in nature, meaning they increase as the export volume rises. The decision provoked strong criticism among businesspeople active in the field.
It will incur hefty losses on investors and shareholders of the steel industry, said a member of the board of directors of Iran’s Steel Producers Association.
“The Industries Ministry’s new measure to impose customs duties on the exports of steel industry’s downstream product like ingots and reinforcement bars is a big mistake. The war between Ukraine and Russia has created a vacuum in their exports of these products. Now is the time for Iranian steel and mineral products to fill this gap and find new markets across the globe. It is unfortunate that the government comes up with such ways of gaining revenues for itself, when it can instead think about how increased exports can raise the foreign currency earnings for the country,” Reza Shahrestani added.
Anoush Roham, secretary of Pipe and Profile Producers Syndicate, echoed the same concern and said now that Russia has been sanctioned, it has lost its international markets for many commodities and global prices have increased for the same reason.
“It was estimated at the beginning of the war that demand for Iranian commodities will increase and replace those produced in Russia and Ukraine. Therefore, the Industries Ministry decided to set customs duties on the exports of some goods to be able to manage the situation and prevent supply shortage in the domestic market. But there are many faults in the regulation that shows the decision is not quite thoughtful.”
Karim Rahimi, a member of the board at the Iranian Steel Rolling Association, says after oil, gas and petrochemicals, the steel sector brings in the most foreign currency to the country.
“I believe that the government’s decision was aimed at controlling local prices. But there are better ways to do so, which are less detrimental to the steel sector. One way is to provide raw materials like sheets to the industry and another way is to manage Iran Mercantile Exchange and make prices real.”
Steel Exports at $7.4b in Fiscal 2021-22
A total of 11.69 million tons worth $7.41 billion of steel were exported to 59 countries in the fiscal 2021-22 (ended March 20), according to the Iranian Mines and Mining Industries Development and Renovation Organization.
China with 3.54 million tons worth $2.02 billion, accounted for 30.3% of Iran’s total exports in weight and 27.3% in value to top the list of export destinations.
It was followed by Iraq with 1.9 million tons (16.3%) worth $1.26 billion (17%), Indonesia with 1.7 million tons (14.5%) worth $1.09 billion (14.8%), Thailand with 1.17 million tons (10%) worth $750.12 million (10.1%) and the UAE with 724,170 tons (6.2%) worth $544.35 million (7.3%).
The Iranian Steel Producers Association earlier reported that 7.68 million tons of semi-finished steel products were exported from Iran in the fiscal 2021-22, up 25% compared with the previous year.
Billet and bloom had the lion’s share of semis exports with an aggregate of 5.1 million tons, up 12% compared with the previous year’s corresponding period.
Slab exports amounted to 2.58 million tons during the period, up 62% year-on-year.
Exports of finished steel products grew by 20% to 3.4 million tons during the period.
Rebar accounted for the largest portion of finished steel products exported from Iran during the period, with 2.5 million tons. The total volume of Iran’s rebar exports experienced a 36% growth compared with the same period of last year.
Beam exports amounted to 145,000 tons during the period under review, down 15% YOY.
About 200,000 tons of L-beam, T-beam and other types were also exported from Iran during the period, up 6% YOY.
Hot-rolled coil exports amounted to 433,000 tons, registering a 20% decline compared with the year before.
Cold-rolled coil with 17,000 tons registered a 35% decline year-on-year and coated coil with 115,000 tons, up 46% YOY, was the other finished steel product exported from Iran.
Exports of direct-reduced iron increased by 25% YOY to 1.06 million tons, ISPA figures show.
