Iran plans to boost steel output to 25mtpa

February 2019

Iran is capable of producing 25 million tonnes (mt) of steel in the current fiscal year which ends on March 21, 2019 but foreign sanctions and duties are a big hurdle, the head of the Iranian Steel Producers Association says.

Iranian steel production rose to a record 20.6 mt in the first 10 months of 2018, making the country the world’s 11th biggest producer, data by the World Steel Association showed.

This figure can rise to 25 mt by the end of the current Persian year provided that the government puts its weight behind the push, Bahram Sobhani said.

About 9-10 mt of this amount can be exported if everything goes as planned and the government facilitates conditions for exports, he added. 

In the past, the government has left no stone unturned in bolstering the sector, withdrawing the special rate foreign exchange allocation for steel imports in a bid to support local production.

“Sanctions and other external constraints have made exports of steel products difficult. In this situation, it is expected that the central bank, customs and other bodies will put hands together to export steel. Otherwise, the surplus output should be stocked or production slashed,” Sobhani said.

Iran’s steel exports are already facing an increasingly hostile terrain in Europe where the bloc’s executive body, the European Commission, has levied trade tariffs against Iranian products.

EU’s addition of new countries to the punitive measures gives added ground to accusations of protectionism from international steel exporters.

Last October, the EU decided to hit hot-rolled steel from Iran with trade tariffs despite initial opposition to punitive measures by European governments.

US sanctions introduced in August represent a double-whammy. In October, the US Treasury announced sanctions on Mobarakeh Steel Company, the largest steel maker in the Middle East and North Africa and one of the largest industrial complexes operating in Iran.

However, the degree of the Iranian steel sector’s vulnerability to outside sanctions is markedly reduced.

When slapped with US and European sanctions in 2011, Iran was the world’s second or third biggest steel importer with 11 mt a year, which gnawed at its oil revenues at a cost of $7-8 billion.

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