Iran, one of the largest exporter of billet is growing steelmaking capacities in the country, together with increasing export volume and weakening domestic demand. During first 8 months of current Persian year, the nation exported 4.22 MnT of semi-finished steel up by 83% Y-o-Y against 2.30 MnT exported in last Persian year, ISPA reported.
The growth of semi-finished export was mainly increased because of higher slab shipment, which was around 1.90 MnT in current Persian year up by 171% Y-o-Y against 0.70 MnT exported in last year.
“The market of semi-finished steel is not protected in Europe and HRC export may be replaced by slab and billet,” one source said.
At present, the major consumers of Iran’s semi-finished steel products are located in Asia as well as in the Middle East and North Africa. Late October, news spread around the market about the possible 25% increase in billet shipments from Iran to Asia in the mid-term.
As per a trader based in northeast Asia “Billet export volumes from Iran to Asia may increase by 25% in the mid-term, reaching 750,000 tons”.
“In the future, it is possible that Iran may export some material to China too, because Iranian producers are enjoying the advantage of access to cheap gas and iron ore as compared to China,” another source said.
Steelmaking capacities expansion contributed a lot in export volume growth.
Slab making capacity of the nation increased after the massive expansion at the country’s largest steelmaker Mobarakeh Steel Company and its subsidiaries, which increased the company’s total capacity to produce slabs from 2.6 MnT to 10.3 MnT/ per year.
In November 2016, the company added a 1.8 MnT/per year continuous casting machine at its main plant located in Isfahan Province, which increased its slab production capacity to 7.2 MnT/per year. In April 2017, the producer also doubled the capacity at its subsidiary Saba Steel Complex by making it to 1.6 MnT.
One of the major MSC subsidiary, Hormozgan Steel Company (HOSCO) has the capacity to produce 1.5 MnT/per year of slabs. In total, MSC holds 85% of the total country’s (12 MnT) slab-making capacity.
Billet production capacity also witnessed significant increase of 5 MnT/per year in last couple of years, with major projects launched in 2017. This indicates that the billet market still need time to strengthen their position and get exports going.
Major billet production expansion during the period happened at Qaenat Steel Complex (0.80 MnT/per year), Khorasan Steel Complex (0.65 MnT/per year), both located in Khorasan Razavi Province. Also at Chadormalu Steelmaking Plant (1.2 MnT/per year) in Yazd Province and at Bardsir Steelmaking Plant (1 MnT/per year).
In 2016, Esfahan Steel Company expanded its billet production capacity by adding a 1.2 MnT billet continuous casting machine to its existing 3.8 MnT capacity. These expansion helped the country’s total capacity for billet production to reach around 23 MnT/per year. However, around a half of these capacities remains under-utilized due to the lack of finance and demand in the domestic market.
Weak Domestic Demand
Domestic semi-finished steel consumption in the first half of the current Iranian year dropped by 4% to 7.26 million tons in the country, ISPA announced.
This was mainly attributed to the drop in finished long steel production amid a lack of financing in the domestic construction sector.
Despite this fact, both billet and slab output in Iran rose, supported by higher exports, demonstrating a 16% and 14% growth to reach 7.53 MnT and 6.67 MnT respectively.
Inputs taken from Financial Tribune
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