(Minews) - A range of steel products produced in Iran have been hit as Chinese exports surge.
The latest data released by Iranian Mines and Mining Industries Development and Renovation Organization, the major state-owned steel and mining holding company, shows that producers of girders and rebar have reduced output over the past two Iranian years.
One of the major players in the steel market, Iran National Steel Industrial Group, produced 90,319 tons of girders in the last Iranian year, which ended in March 2015. The figure shows a drop of about 40 percent compared to a year before, when production stood at 158,278 tons.
INSIG also saw its production of rebar fall. Last Iranian year, its rebar output figure tipped 593,582 tons, while reaching 766,194 tons the preceding year.
The same trend can be seen for other major steel producers in Iran. Iran Alloy Steel Company produced 284,866 tons of rebar two years ago, falling to 310,576 tons last year.
Production of rebar also fell at the Azarbaijan Steel Company from 373,941 tons two years ago to 145,032 tons last year – a reduction of more than 60 percent.
Khorasan Steel is one of the only exceptions. Production at this firm increased from 588,058 tons two years ago to 619,314 ton last year.
Global iron ore prices have plunged since late 2013. Averaging over $130 per ton between 2009 and 2013, prices have been on a downward fall for most of the past two years as major firms such as BHP and Rio Tinto continue to expand output in Australia and Brazil while China, the main growth market of the industry, has been facing industrial overcapacity and a housing slump.
Morgan Stanley predicted that prices in 2015 will average $79 a ton, while Citigroup has warned that prices may even fall below $60.
Lower iron ore prices and excess capacity have caused an explosion of Chinese steel exports in 2014 and 2015, alarming steel producers in other countries. Chinese steel exports grew by 41 percent in the first quarter of 2015.
So far, India and the EU have taken steps to limit the flow of Chinese steel, which has come at such low prices that it is commonly referred to as ‘dumping.’ Policies include increasing tariffs and imposing import controls.
Iran has recently taken measures to limit the import of Chinese steel products, notably by stripping steel importers of their license to tap into the official exchange rate. The official exchange rate is subsidized and trades are at about 20 percent below the market value of rial.
According to Chairman of Iran’s Chamber of Industry, Mines and Trade Abdolvahab Sahlabadi, the current Iranian year could be one of the best years for domestic steel manufacturers, “as the new policies formulated by the Industries Ministry restrict the export of iron ore, causing added value in this sector to increase as iron ore is processed to more valuable materials.”
