Steel consumption down by 5% in Iran

Business Materials 28 March 2019 13:07 (UTC +04:00)

Baku, Azerbaijan, Mar. 28

By Elnur Baghishov – Trend:

Despite Iran's steel production increasing by 15 percent during the last Iranian year (started March 21, 2018) (when compared to the preceding year’s (starting March 21, 2017) figures), its domestic consumption dropped by 5 percent, a member of Iran Steel Producers Association Reza Shahrestani told Tasnim News Agency, Trend reports.

According to Shahrestani, Iran's steel exports failed to reach 12 million tons last year (started March 21, 2018).

He added that the government's efforts to keep steel prices at a low level, despite the implementation of sanctions and the increase in the dollar's price, have led to a number of problems.

"Those who want to export steel products should have put the product up for sale at the stock exchange and sold at a price set lower than the market price," he said.

What is interesting, he added, is that the stock exchange's customers sold the same products at a higher price at the market.

Shahrestani believes that the steel bars purchased on the stock exchange had to be converted to armatures and pillars and put up for sale at a low price. Not only did this not happen, but the price difference also led to the formation of an economic rent of more than 30 trillion rials (app. $714 million).

"The illogical prices set by the [Iranian] Customs with regards to the return of foreign currency earned from steel exports caused the steel sector’s exports to hit the brakes. As such, someone exporting $450 had to return $550," he said.

Noting that producers end up needing $120 for every ton of steel, Shahrestani said that this currency is spent on supplying raw materials, equipment and electrode. Accordingly, about $3 billion is required for the production of 25 million tons of steel.

If the export restrictions are not eliminated, the producer will be forced to reduce production, as otherwise a negative competition may for in the local market, Shahrestani pointed out.

"If the government carries out an appropriate policy for the production and export of steel, local producers will definitely increase their production to 27-28 million tons," he said.

Shahrestani said that only 8 million of the 25 million tons of steel produced in the country were exported, and about 1 million tons were taken out of the country illegally, through smuggling.