Iran’s steel import drop, prices rise sharply

Iran’s steel import drop, prices rise sharply

Dalga Khatinoglu, Trend's Iran News Service Chief

Imports of steel in Iran have decreased by 44 per cent during the first 11 months of the current Iranian calendar year (March 20, 2012-February 18, 2013), while prices have increased by over 100 per cent.

The giant steelmakers of the world have stopped or reduced their trade with Iran due to banking and economic sanctions which were imposed on Iran by the EU in November last year. This issue along with cutting the provision of the official rate of the dollar to domestic steel importers by the Iranian government led to a sharp rise in steel prices in the second half of the previous year, so that prices rose by over 100 per cent.

On Tuesday, Reuters reported that South Korea's POSCO, which is the world's fifth largest steel producer, has cut its ties with the Iranian government and is doing limited trade just with private companies.

The secretary of the Association of Iranian Steel Producers, Rasoul Khalifeh-Soltani, announced on Tuesday that imports of crude steel and products fell by eight and 36 per cent, respectively, in the first 11 months of the current year compared to the same period last year.

Based on a report by the International Steel Statistics Bureau, Iran imports over 10 million tons of crude steel and steel products, annually. According to Soltani, Iran imported 2.8 million tons of crude steel and 3.2 million tons of steel products in the first 11 months of the current year.

The sharp decline in imports of crude steel and steel products happens while according to official statistics, the domestic production of crude steel and steel products rose by just seven and two per cent totally during the aforementioned period respectively.

The production of iron beams hit 1.8 million tons, showing a nine per cent fall year on year. The production of corrugated iron bars hit 5.2 million tons, showing a seven per cent fall.

The rise in steel product output has been mainly due to the production of steel sheets which has increased by 13 per cent.

Iraj Rahbar, chairman of the Association of Iranian Building Construction Agencies, told the Mehr News agency that prices of steel products in Iran have risen by 100 per cent, so that steel is currently sold at 22,000 rials.

In the first 11 months of the current year, Iran produced 13 million tons of crude steel and 16 million tons of steel products. A fall in imports and rise in prices have badly affected Iran's housing sector. According to reports, house prices in the north of Tehran rose by seven per cent in the summer compared to the spring. Prices of newly built houses have reportedly increased by 42 per cent compared to the last solar year's prices.

Iran's national currency lost value by one third against the dollar during the past year. Meanwhile, the Central Bank of Iran has predicted that the inflation rate will reach 30.5 per cent by the end of the year.

On January 4, Mohammad Firoozi, a member of the Iranian parliament said the inflation rate in the housing sector is more than the overall inflation rate in the country. Cutting the allocation of the official dollar rate which is 2.5 times lower than the free market rate to the importation of crude steel is also among the factors which have negatively affected development and industrial activities.

Iran's Supreme Audit Court has recently released a report in which it said that during the first nine months of the current year, over 6,189 billion rials was allocated to development plans, but just 16 per cent of that figure was paid.

Each USD is sold at 33,500 rials in the open market, while the official price is 12, 260 rials.

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