Earlier this year, the Iranian Steel Producers Association wrote a letter to Reza Rahmani, then Minister of Industry, Mines and Trade and Chairman of the Market Regulation Working Group, to reduce steel exports if current procedures and regulatory and executive restrictions continue. They had warned, but apparently this issue was not very important for the government.
In this letter, referring to the amount of iron and steel exports of the country in 1398, which had reached more than 9 million tons and was worth about $ 3.5 billion; “If it were not for the regulatory and executive restrictions of the Market Regulation Headquarters and the Ministry of Industry, Mines and Trade, the golden opportunity of the country’s steel exports would not have been lost before the US sanctions were tightened, and now we may see about $ 5 billion in steel exports.”
Interestingly, according to the World Steel Association, while the corona outbreak has shut down many factories and reduced steel production in the world and in industrialized countries, Iran’s steel production grew by 14.1 percent in March.
*** Hit to export
In this regard, Keyvan Jafari Tehrani, Master of Global Steel and Iron Ore Markets, said in an interview with Economics 24: “Despite the outbreak of the corona virus, we have not been able to use the opportunities created in the steel market in such a way that due to high production capacity, exports Let’s have a good one, because the government has also aggravated the export problems by restricting exports through different regulations and instructions. Steel companies, on the other hand, are facing new costs due to the pressure of sanctions.
According to him, this year the situation of the country’s steel production is good despite the conditions of Corona, but we see that at present the export of this product has decreased by 44%, and this issue is very worrying.
Jafari Tehrani stated: “One of the things that has affected the reduction of steel exports is the restrictions that the government has created and has caused the steelmakers to be forced to offer goods on the stock exchange, and after meeting the needs of the stock exchange, which is specified.” This is not a real need, or they are making an emotional purchase simply to maintain the value of their capital due to the devaluation of the rial; These are important things to consider.
*** High demand in China
“We are in a situation where the global steel market is very favorable due to China’s high demand, and the world’s major iron ore producers, as well as middle steel producers, are trying to make the most of the Chinese market,” he said. We must also take advantage of this opportunity.
He added: “Except for China, which is and is the largest steel consumption market in the world, this year other countries have reduced their per capita steel consumption due to the restrictions imposed by the corona.”
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Jafari Tehrani stated: From India, whose per capita steel consumption is very low at about 74 kg, to economically developed countries such as Germany and Japan, due to the restrictions imposed by the corona, their per capita steel consumption has decreased and many projects have been suspended.
He continued: “For example, the UAE had many projects that suspended everyone, as well as major events in the world and the region, which naturally had an effect on increasing per capita consumption of steel and construction, which have now been stopped. .
According to Jafari Tehrani, the suspension of these projects or their postponement to next year, such as the Dubai Expo 2020 or the Tokyo 2020 Olympic Games, which were all postponed to next year, confirms this.
*** China’s per capita consumption increase; The best opportunity for Iran
“But in this situation, China has tried to focus all the attention of the world’s steelmakers on itself by increasing per capita steel consumption and introducing new projects,” said a senior expert on global steel markets.
He continued: “China’s performance has caused the price of scrap iron to increase and the price of iron ore to reach the highest price record between six months to a year and a half.”
Jafari Tehrani emphasized: Other European companies that are the world’s largest steel producers, such as ArcelorMittal, also have consumer market problems.
He added: “The purchase of six billion dollars of India’s old steelmaker, Asar Steel, by Arcelor Mittal in December last year also enabled the steelmaker to overcome this crisis.”
Jafari Tehrani said: Nippon Steel is another company that was recently bought by ArcelorMittal in the early years of the year before the Corona crisis, because despite its favorable economic conditions, we can boldly say that the situation of the steel consumption market in Japan is so bad. Even big automakers like Toyota are facing a serious drop in sales, and if ArcelorMittal did not buy Nippon Steel, Nippon Steel would be in a very bad position. So it shows how much the merger of companies will help them survive in such a situation.
*** Merger of companies
According to this global steel markets expert, in general, now in the context of the Corona crisis, the steel industry is moving in a direction where only very large companies will survive and small companies will be eliminated, so companies are also thinking less. Serious mergers have fallen before bankruptcy.
Jafari Tehrani continued: The steel market, like other markets, has its own tricks; One of these situations in such an unfavorable market situation is Chinese demand. As mentioned, in most of the world’s steel-producing countries, There is a consumption crisis and per capita consumption has decreased, but this good market in China allows steelmakers to continue to survive and get through these difficult coronary conditions.
*** The United States is weak in maintaining steel production and markets
He stressed: “In relation to North America, it should be noted that the United States, as the fourth largest steelmaker in the world, due to the highest percentage of corona, its steel industry is fully involved. Also, there is no high consumer market due to these conditions.” Naturally, the economic situation of this country has also been affected by the elections that will be held on November 3, 2020.
Jafari Tehrani continued: “Before his election in 2016, Trump had promised to save the American steel industry, but the crisis created by Corona in the American steel industry has had a devastating effect on this industry, and it should be seen that With these descriptions, what will be the result?
In the end, the senior expert of global steel markets emphasized: The global steel market has undergone changes due to the spread of the corona virus, so given the high capacity of steel production in the country, the opportunity for more Iranian products in the world market should not be imposed by restrictions. The government will disappear.
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