Iran Steel Export Target: 15m Tons per Year

Iran's Industries, Mining and Trade Minister Mohammad Reza Nematzadeh said the government is targeting 15 million tons/year of steel exports during the sixth five-year development plan (ending March 2022), the Iranian Steel Producers Association announced.

"The current export trend implies that this target is achievable and is expected to reach up to 8 million tons in the current Iranian year ending March 2018," Nematzadeh was quoted as saying by S&P Global Platts.

Some 5.53 million tons of semi-finished and finished steel products were exported by Iranian steel producers in the last Iranian year (ended March 20, 2017), equivalent to about 30% of the country's output, ISPA reported on its website.

Exports are considered a solution for steel producers facing the current recession in the domestic construction industry and the consequent lack of local demand.

"Iranian prime long steel producer Esfahan Steel Company, or ESCO, is exporting all its products now," the company's managing director, Ahmad Sadeghi, said at a conference in Tehran on Monday.

"Domestic demand is quiet and 100% of the company's products are being exported for the time being. Esfahan Steel is being saved by its profitable exports and we hope that this will continue in future."

A steel specialist in Tehran believes stimulation of demand in the domestic market is probably the largest challenge facing the target of annually producing 55 million tons by 2025.

"Despite the rising trend in exports, a portion of the country's capacity remains idle, mostly at smaller private mills," he said on condition of anonymity.

"Capacity utilization in Iranian steel production is at around 62%, lower than the international average of 72%. It has fallen in the last few years since nominal capacity was raised but demand is unchanged or even falling."

Nominal capacity is at around 32 million tons/year now.

During the last round of televised presidential debate one week before the election, Rouhani said remaining sanctions against Iran would be removed during the next four years of his presidency.

This would be important for Iran's steel industry. Many international banks are still reluctant to do business with Iran due to uncertainties over US' future policy on Iran. This would increase international trade costs for Iranian exporters as well as financing of projects.

Iranian mines and metals state holding IMIDRO has said the Iranian metals and mining industry is in need of $40 billion in investment, with foreign financing required to meet a major portion of that need.