in the shadow of international sanctions, the country’s steel industries are facing major challenges that limit production and trade. These challenges exist while this year, at the suggestion of the Supreme Leader of the Revolution, a production leap has been targeted.
The story of the difference between steel sheet manufacturers and end products such as pipes and profiles is long. On the one hand, pipes and profilers complain about the lack of raw materials, and on the other hand, steel sheet manufacturers emphasize that they sell all their products through commodity exchanges, and the turmoil in this market stems from elsewhere.
However, both sides admit that there are properties that take advantage of the gap in this market and make a significant profit from it. Eventually, the final consumer and the workers of the production units will suffer more than others from these conditions. Since this story has existed for a long time and is not limited to the steel sheet market, a system called Optimizer was defined by the Ministry of Industry, Mines and Trade to help determine the real needs of stock exchange buyers.
*** Optimized system
Thus, buyers must first be identified in this identification system and their needs. But in practice, the system did not yield successful results, even giving some people the opportunity to take advantage of the rent. That is, some people buy raw materials from the commodity exchange and sell them in the open market by formally registering a production unit with false capacities. While real producers face the challenge of supplying raw materials and operate with very low capacities. It is as if this series of intermediaries in the mining industry has no end and every action needs a caregiver, every caregiver needs another caregiver and this fruitless chain continues.
The challenges in this chain have intensified to such an extent that the new head of the Ministry of Industry, Mines and Trade, in the early days of his activity, has noticed this disorder. Jafar Sarghini said in this regard: The problem of allocating quotas in the optimization system is an old problem that applies to most products. But steel sheets have already been discussed with pipe and profile unions. The union has already announced its readiness to assist the ministry in controlling the steel sheet market. He also said that holding meetings with steel companies was necessary to regulate the steel market. To check the current situation, we went to the activists of the pipe and profile industry and asked for their opinions in this regard.
*** We do not have raw materials
Kiomars Fathollah Kermanshahi, secretary of the Syndicate of Manufacturers of Steel Pipes and Profiles, said in an interview with Samat: The supply of raw materials is the main problem of the producers of pipes and profiles in the country. Meanwhile, the main producers of steel sheets in the country have announced that they will sell all their products through the commodity exchange. However, we see that syndicate producers can only buy raw materials at 20 to 30 percent of their unit capacity.
Part of this challenge must be attributed to the weakness of the optimization system. This system has been constructed with the aim of measuring the capacity of the country’s steel units, however, so far, not only has it not been able to show acceptable performance, but also serious challenges have been created in the way of using this system.
Kermanshahi said: A committee has been formed with the presence of the representative of the Steel Pipe and Profile Syndicate, the representative of Mobarakeh Steel of Isfahan as the largest and main producer of steel sheets in the country and also the representative of the Consumers and Producers Protection Organization to study the challenges of this sector. Of course, we requested that the representative of the Deputy Minister of Industry of the Ministry of Industry, Mines and Trade also be present in this committee. The committee should re-evaluate the capacity of steel pipe and profile production units, so that raw materials can be provided to manufacturers based on new and accurate measurements. He added: “Pricing is another point that should be considered and reviewed by this committee.”
*** The main challenges of the country’s steel industries
At present, in addition to discussing the supply of raw materials and the liquidity of the units, other basic issues such as inflation, overhead costs, as well as increasing the cost of products are raised. These also create new challenges for producers. We will put these challenges on the agenda of the committee and move them forward. In fact, in the shadow of international sanctions, the country’s steel industries are facing major challenges that limit production and trade. These challenges exist while this year, at the suggestion of the Supreme Leader of the Revolution, a production leap has been targeted.
Therefore, all those in charge of production in the country must enter the scene to achieve this goal with the help and following the concepts of resistance economics. Secretary of the Syndicate of Manufacturers of Steel Pipes and Profiles said: At present, 160 production units are operating under the auspices of the Syndicate of Pipes and Profiles.
Conditions must be created in such a way that these producers can first meet the domestic demand for steel products, and then include exports in their activities. In such a situation, on the one hand, with the completion of the production chain, added value is completed, and on the other hand, several job opportunities are created. Undoubtedly, in such circumstances, the sale of raw materials will be prevented. Therefore, the officials and those in charge are expected to take a step towards solving the challenges of the producers of steel pipes and profiles with a cross-sectoral vision.
*** We are looking for transparency
Kermanshahi, in response to a question about the existence of pipe and profile production units that have been registered only to benefit from the capacity to receive raw materials, said: Optimization system is responsible for determining the production capacity of units. The Syndicate of Manufacturers of Steel Pipes and Profiles seeks transparency, which means we want no rent.
Undoubtedly, this challenge will be resolved with the help of regulatory bodies. If the optimization system works properly and at the same time the nominal and current capacity of the units are determined, many problems and shortcomings in this area will be solved.
He added: “Currently, construction in our country is facing a recession. In such cases, the need for pipes and profiles is estimated to be less than the capacity of the steel industries producing pipes and profiles, but if the recession in construction is resolved, the situation of these steel industries will return to normal. Until then, production can be continued at maximum capacity by utilizing export capacities.
Many of Iran’s neighbors have gone through war, meaning that construction is currently booming in these countries. As a result, Iran can meet the needs of these countries for pipes and profiles. This action on the one hand leads to value creation and on the other hand, leads to more currency for the country. Especially now that the country’s oil exports have become very difficult; Therefore, the export of non-oil products can solve the problems in this area.
*** Poor and unstable management
For several years, the pipe and steel profile industries, which consume hot-rolled steel sheets, have faced major challenges in supplying their raw materials. Part of this shortcoming is the low production capacity of hot rolled sheets compared to its consumption. But part of this shortcoming is due to the lack of efficient management by the Ministry of Industry, Mines and Trade. In recent months, with the constant changes of the managers of this ministry, the situation has become more unstable than before and the balance of this market has disappeared.
The vice president of the Syndicate of Pipes and Steel Profiles further emphasized: The optimization system was established with the aim of measuring the capacity of production units, so that raw materials can be provided to them according to the needs of producers. However, the use of this system has not only not had a positive result for the steel market, but has even provided the ground for some of these conditions to be abused, because the quota in this system has not been set correctly and we see that some units with high capacity have quotas. Low allocates raw materials.
In addition, it is not clear in which matchmaker the raw materials will be supplied. Undoubtedly, as transparency in transactions increases, the field of intermediation and profitability of certain individuals decreases. But at present, due to the inefficiency of steel market management and the lack of transparency in sales, manufacturers are forced to buy the raw materials they need from the open market at a much higher price.
*** On the verge of closing
In an interview with Samat, Mehdi Malek Sabet, Vice President of the Steel Pipe and Profiles Syndicate, stated: At present, Mobarakeh Steel, Ahvaz Rolling and Pipe and Gilan Rolling Companies are among the main producers of hot steel sheets in the country. Of course, among the mentioned producers, Mobarakeh Steel has the main share of the country’s steel sheet production.
Malik Sabet added: the quota of raw materials that are currently provided to the units through the commodity exchange is not as much as 10% of their production capacity. If this trend continues, it will pave the way for the closure of steel pipe and profile manufacturers.
He added: “One of the main challenges in our country, which also affects the activities of steel industries is the lack of accurate statistics in various fields.” Over a period of time, the Ministry of Industry, Mines and Trade assessed the capacity of steel pipe and profile production units. But the nominal capacity of many units was incorrectly recorded. In addition, taste ideas were very effective in determining and recording the nominal capacity of the units.
Accordingly, we see that currently more than 500 units of steel pipes and profiles are present in the optimization system, while according to the statistics provided by Mobarakeh Steel, this company in the past and when there was no obligation to sell sheets in the commodity exchange, It sells its products for only 120 codes.
*** Production capacity of hot rolled steel sheet
The activist of the pipe and steel profile industries said: Mobarakeh Steel, as an industrial unit, has a certain production capacity. The consumption of hot steel sheet for the production of pipes and profiles in our country is estimated at about 5 million tons, but there is no capacity to produce this volume of sheet in the country. This has also led to units operating at very low capacity. As a result, we see that the units are closed one after another.
Part of this shortage of hot-rolled steel sheets in the country should be attributed to the cessation of steel sheet imports. In previous years, part of the country’s need for paper was met through imports. But at present, due to currency restrictions as well as the challenges posed by international sanctions, such as more difficult money transfers, the import of paper into the country has stopped.
In such a situation, the shortage of raw material supply is not so strange.
He added: “In the current position of those in charge in the Ministry of Industry, Mines and Trade, the capacity of the country’s pipe and profile production units should be seriously and under the supervision of the private sector (Syndicate of Manufacturers of Steel Pipes and Profiles) as well as the production sector (Mobarakeh Steel Company).” To specify.
*** Eliminate the field of rent-seeking
Meanwhile, the syndicate has assessed the capacity of about 70% of its member units. But other parties insist that the capacity be re-evaluated. In addition, they intend to take into account the average purchases of 1998 and 1997 in capacity measurement, while the average purchases in previous years are not valid and should not be relied upon.
In the end, Malik Sabet said: Barkh has been for several years The units have taken advantage of this rent, but now the ground for this profit must be eliminated. Conditions should not be such that some people, as steelmakers, buy and sell it on the open market.
At the same time, steel sheet manufacturers are required to provide monthly production, sales and buyer statistics. Undoubtedly, in such circumstances, the possibility of abuse is eliminated. However, it is thought that there is not much desire for transparency in our country.
*** Concluding remarks
The optimization system was designed to organize the purchase of raw materials through the commodity exchange, but this system does not have enough credibility to be used as a reference for determining the quota of raw materials.
The information registered in this system has different shortcomings and it is not possible to determine the quota of raw materials required by production units based on them. This weakness is especially great in the pipe and steel profile industries.
Of course, by forming a joint committee of representatives of the Syndicate of Steel Pipes and Profiles, Mobarakeh Steel and the Ministry of Industry, Mines and Trade, it is possible to verify the mentioned capacity measurement in this system in order to solve the related problems.
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