Following the re-election of Hassan Rouhani as Iranian president, the country's industry, mines and trade minister Mohammad Nematzadeh announced that the government is targeting 15 million mt/year of steel exports during Iran's sixth development plan to 2021, according to the Iranian Steel Producers Association Tuesday.
The current export trend implies that this target is achievable, and is expected to reach up to 8 million mt in the current Iranian year ending March 2018, he added.
Some 5.53 million mt of semi-finished and finished steel products were exported by Iranian steel producers in the last Iranian year ended March 20, 2017, equivalent to about 30% of the country's output, according to ISPA information published on its website.
Exports are considered to be a solution for steel producers facing the current deep recession in the domestic construction industry and the subsequent lack of local demand.
Iranian prime long steel producer Esfahan Steel Company, or Esco, is exporting all its products now, the company's managing director Ahmad Sadeghi said at a conference in Tehran on Monday reported by domestic news agencies.
"Domestic demand is quiet and 100% of the company's products are being exported for the time being," he added. "Esfahan Steel is being saved by its profitable exports and we hope that this will continue in future," he said.
A steel specialist in Tehran said he believes that stimulation of demand in the domestic market is probably the largest challenge facing the target of producing 55 million mt/year by 2025.
"Despite the rising trend in exports, a portion of the country's capacity remains idle, mostly at smaller private mills," he said.
Capacity utilization in Iranian steel production is at around 62%, lower than the international average of 72%. It has fallen in the last few years since nominal capacity was raised but demand is unchanged or even falling, the specialist said.
Nominal capacity is at around 32 million mt/year now.
During the last round of televised presidential debates one week before the election, Rouhani said remaining sanctions against Iran would be removed during the next four years of his presidency.
This would be important for Iran's steel industry. Many international banks are still reluctant to do business in Iran due to uncertainties over US' future policy on Iran. This would increase international trade costs for Iranian exporters as well as financing of projects.
Iranian mines and metals state holding Imidro, has said the Iranian metals and mining industry is in need of more about $40 billion in investment, with foreign financing required for a major portion of that need.
