 |
| Iran is
scheduled to produce some 8.1 million tons of steel and 7.6 million tons
of steel slabs in 2003. |
Due to the declining trend in global
steel prices, the price of steel and steel products will not rise in 2003.
Ahmad Ali Harati Niek, Managing Director of National Iranian Steel Company (NISCO)
believes that the 16% to 20% tariffs imposed on the import of steel products
and a 4% tariff on the import of raw materials do not pose a threat to state
steel production units. However, steel producers from Iran’s private sector
are worried that with the likely fall in global steel prices, they may no
longer be able to compete with the steel products that are imported into the
country. On the other hand, private producers unlike government producers must
import their required steel ingots from abroad and must pay a 4% tariff in
accordance with the Customs Collection Law.
Iran’s bureaucratic decision-making
process is arduous and slow. In these circumstances if the declining trend of
the global price of steel continues and the decision to increase tariffs on
the import of steel products is a long time coming, the private steel
producers will suffer severe set backs. If Iran’s economic decision making
process was conducted in such a way that with the decline of global steel
prices –which would threaten domestic producers– the tariff imposed on steel
imports could be quickly increased, then the well being of domestic producers
would not be jeopardized.
Government steel producers will not be
affected by the decline of global steel prices and the only threat to these
producers is a worldwide crisis in the steel industry. Iran is scheduled to
produce some 8.1 million tons of steel and 7.6 million tons of steel slabs in
2003. In 2002, about 7.5 million tons of steel, as well as 7.5 tons of steel
slabs were produced in the country, so the country is capable of producing
steel and steel slabs in equal amounts. However, the domestic consumption of
steel was as high as 11 million tons in 2002, which means more than 3.5
million tons of steel was imported. The domestic consumption of steel for 2003
is predicted to be some 12 million tons, which is likely to increase with a
boom in the construction sector. This is because unlike many countries in the
world which use concrete and bars, Iran uses iron slates in construction,
which also adds to the instability of its buildings.
Despite all, Iran managed to export 1.5
million tons of steel products in 2002. Iran’s steel is capable of competing
with European products due to its quality and reasonable price. The only issue
obstructing its path to more exports is domestic demand that outweighs
production. The top priority for Iran is meeting the domestic demand before
turning to exports. Harati stated that America is the only country to which we
have not exported steel, indeed if political difficulties did not obstruct the
way, America would have been the best market for Iran’s steel exports
replacing Russia since Iranian steel is of a better quality than that produced
by Russia.
Harati believes that $200-$220 is a
reasonable price per ton of steel slabs. Unfortunately, neither the steel
producers, nor the decision-makers have dared allow a floating price, so its
value can be determined by the market principals of supply and demand. The
country currently has many of the conditions required for floating the steel
price, but the industry suffers from inadequate distribution systems. There
was a time when steel was sold on the black market for a much higher price
than it was bought from the factory. This price difference did not benefit the
consumers, producers or the real distributors and only led to lucrative gains
for a few opportunists.
