Steel Industry in 2016
South Korea, like Japan, without having the raw materials and energy
resources and even a proper market has turned to this industry for
Importance of Steel in Development of Societies
Steelmaking is considered a parent and basic industry which could ensure
sustainable and widespread employment. This industry, in addition to direct
employment generates indirect employment of up to five times of the direct
in addition to industrialization of Western countries and the former East
bloc, has played a pivotal role in the development of East Asian countries
as well. In the meantime, countries devoid of natural resources and the
required raw materials for creation of steel industry have taken measures to
launch the industry in their country. For example, Japan after the World War
II, based its development on iron and steel and at present, chemical and
heavy industries rely on steel industry.
South Korea, like Japan, without having the raw materials and energy
resources and even a proper market has turned to this industry for its
development. The annual production of about 800 million tons of steel by
China and economic growth of that country even under the critical global
economic conditions, are examples of the pivotal role of the steel industry
in industrial development.
With regard to these evidences, industrial policies of the developed
countries, particularly the role of industrial policies of Japan, East Asia
and China, are considered new lessons for development. Among the most
important points of interest in the development experience of countries in
East Asia is that in these countries both the role of the
development-oriented government and developmental organizations and the role
of free economy and the private sector is significant.
Although one of
the important factors in the development of East Asia is attributed to the
efficiency of governments, and the significant role of the
development-oriented government is considered in the development, the new
line of thinking is that the markets and the private sector have had the
best performance and they operate more efficiently for the cause of
industrial development and growth.
Of course, it
should not be forgotten that realization of industrial development by the
private sector is not possible in the absence of infrastructural investment
and establishment of infrastructures by the government. Rather, pioneer
status of the governments in providing these infrastructures and guiding and
planning them is imperative for the completion of the lost rings of
development and promotion of less developed societies. That important duty
is shouldered by the developmental organizations.
that is important in the development of these countries is rapid absorption
and adoption of steel technology from advanced countries that play an
important role in the competition.
In all the
developing countries, the steelmaking projects in the form of complex are
implemented by the government because steel complex is in need of very high
initial investment that no one but the government could tolerate the high
risk of such grave investment. In these countries, too, the process of
construction of steel complexes begins with the government ownership and
then it is delegated to the private sector or by adoption of the policy of
liberalization, the private sector enters into establishment of steel
Iranís private sector has been able to make satisfactory gains in the steel
industry, it is all thanks to the activities, support and help of a powerful
organization called IMIDRO (Iranian Mines and Mining Industries Development
and Renovation Organization).
shows that when a nation is determined to achieve development and bring
about change and when intellectual, mental and motivational conditions as
well as sound management are available, no problem and shortcoming, even
poor natural and material resources, could block the way to development. Man
and his determination and will as well as sound management are the axis of
development. The role of steel industry in industrial development can be a
unique role provided that other elements of development would create no
obstacles in the process of development. Both the public and the private
sectors can be efficient and it is necessary to play a targeted role in the
process of development. The obvious example of this role-playing is
crystallized and manifested in Mobarakeh Steel Complex.
In the 1370s
(1990s) the several hundred million dollars of investment for the purchase
of technical knowhow and establishment of the management system in that
company was not justifiable for most of the industrial sector managers, but
today this investment has produced results and we are witnessing its
positive effects in the industrial development of the country.
proves that the managers should move with their lights on and create a
desirable future so that through timely self-regulation in the event of
adversity and external barriers will not get surprised and in fact make the
country resistant against economic problems.
Today, if Iranís private sector has been able to make satisfactory
gains in the steel industry, it is all thanks to the activities,
support and help of a powerful organization called IMIDRO
Global Steel in Past Year
output in 2016 with a growth rate of 0.7% reached 1.6 billion tons of which
China with an output of 808 million tons had a share of about 50.5%.
Interestingly, Chinaís steel production is more than 10 times of the United
States and 30% more than the total production of 10 steel-producing
countries standing next after China which indicates the importance of the
role China plays in this regard. The average growth rate of Chinaís steel in
2016 was also 1.2%, which is close to two times of the average growth of
steel production in the world, and in fact we are still witness to the
growing share of this country in the global steel.
The Chinese are
still continuing the policy of financial expansion and growth through
injection of bank loans which will cause optimal growth in steel demand and
price hikes. The world steel price during 2016 enjoyed a growth rate of
close to 72% which is the result of the raw materialís price increase as
well as aggravation of global demand, especially in China. In addition,
supply constraints, as a third factor, have created this condition.
Therefore, a favorable opportunity has been provided for Iranís steel
industry to make more profits in production and take measures to finance and
develop unfinished projects.
IMIDRO, in an effort to produce seamless pipes, has signed
memoranda of understanding which will be put into operation
beginning of 2017 and before the New Year holidays in China, we were
witnessing fluctuations mostly on drops in prices, but after the reopening
of markets in China and the return of Chinese from vacation, the slight drop
in prices was compensated and prices soared to the highest level in 29
months leading to February 2017. Iron ore prices passing the margin of $100
in Dalian stock market and the plan for the closure of units producing steel
from scraps, due to lack of standardization of the products, will endanger
production of 120 million tons of steel in China. This incident is among
positive factors for boosting the market in 2017 and means continuation of
the favorable situation for steel-makers, including Iranian steel-makers.
consume 32.5 tons of iron ore per second and their steel makers in order to
reduce environmental pollution have embarked on consuming high grade iron
ore which has decreased local iron ore mines output and registered 7.5%
increase in imports in 2016 (a total of 1024 million tons). Increase in
Chinaís demand has caused a growth of 81% in the price of iron ore in the
world market which continues in 2017 as well. Iran enjoys optimum iron ore
reserves and the Iranian steel makers enjoy the relative advantage of price
which is a good opportunity to grab.
the world economy show that the volume of housing construction in the world
in 2017 will make a growth of 3.4% which is the highest figure since 2006.
However, concern over importation of cheap steel by China has imposed
anti-dumping tariffs on Chinese steel and caused a reduction of 4 million
tons in steel export in 2016 (the figure for 2016 was 108 million tons).
This issue can be a special opportunity for Iranian exporters to meet part
of the shortcoming of the regional markets. Japan too due to the
strengthening of part of its infrastructures, has predicted 3% increase in
steel consumption in 2017.
Iran, in the
first 10 months of 1395 (March to December 2016) exported a total of 4.4
million tons of steel which shows an increase of 45% over the same period
last year. Meanwhile, the share of Iranís steel production from the Middle
East output is 61.6%, showing a growth of 1.8%.
Coal prices in
2016 after fluctuations recorded a growth of 300% and were later stabilized
at $168 per ton which is about double the prices in the beginning of 2016.
This provides a special opportunity for producing steel out of natural gas
for countries including Iran. Iran by producing 14.5 million tons of sponge
iron in 2016 ranked first in this sector and has a share equivalent to 25.3%
of the world production. Under the present circumstances, Iranís steel in
terms of production costs is competitive. Because, about 87% of Iranís steel
production is through direct reduction and from the natural gas.
In the Sixth
Development Plan of the Islamic Republic of Iran, in accordance with the
approval of the Joint Committee, the price of gas for energy consuming
industries such as steel is expected to be set at 90% of the lowest pricing
rate in the region. For the deprived areas the figure would be 80%.
Therefore, the cost of production in direct reduction method is in line with
the motivating gas price and will be an appropriate opportunity for domestic
and foreign investors to take advantage of.
products with higher value-added for increasing the level of competitiveness
is among the targets of the steel industry and in this way, production of
national rail at Isfahan Steel Mill and Iran Alloy Steel has kicked off
which is good news for the countryís steel industry. Increase in production
of special sheets has been achieved by companies such as Mobarakeh Steel
Complex and Oxin Steel.
IMIDRO, in an
effort to produce seamless pipes, has signed memoranda of understanding
which will be put into operation after financing. Increase in production of
downstream products which will basically increase the profit margin of the
producers, will increase competitiveness of Iranís steel industry.
It is predicted
that 1396 (2017-2018) will be a good year for Iranís steel and steel supply
chain in terms of production, export, operation and commissioning of
development plans as well as physical progress of ongoing development