Iran’s dramatic currency depreciation has had beneficiaries, foremost in its burgeoning steel industry which has seen exports remain steady despite the new US sanctions.
Last August, the US reenacted its secondary sanctions against Iran’s steel and aluminum products, gold and precious metals, graphite and coal to choke off the country’s vital revenue streams.
Further sanctions were imposed in November to target its lifelines in the oil, energy and shipping sectors, leading to a drop by several hundred thousand barrels per day in oil exports.
However, the metals industry has taken it all in its stride and even been boosted by the lower rial which has made steel exports highly competitive on world markets.
Iron ore pellet represented the biggest jump last year as the country opened several pelletizing projects.
According to CEO of Tehran-based AASIM Consulting Group Mohsen Parvan, Iran’s steel exports this year which ends March 21 are set to equal last year’s record of over 9 million tonnes.
“Iran has so far exported 6 million tonnes of steel in this Iranian year, similar to the previous year. At least half is semi-finished products such as billet and slab,” oil pricing agency S&P Global Platts quoted him as saying.
Iranian steelmakers have largely maintained their links with their partners, mostly in the Middle East, Russia, China and the European Union, despite the sanctions.
Iranian rebars, billets, IPE (I-beams), blooms and slabs have avid customers in Iraq, Qatar, Oman and the United Arab Emirates.
CIS nations such as Ukraine and Kazakhstan also take in supplies, with small amounts being sold in the EU where Iran’s steel exports are facing an increasingly hostile terrain.
The European Union has been levying tariffs on Iranian steel imports since October 2017 when the European Commission, the bloc’s executive body, hit hot-rolled steel from Iran with taxes.
Germany, Spain and Italy are Iran’s key customers for steel in the European Union.
According to Iranian Steel Producers’ Association (ISPA) figures, exports of steel products totaled 5.273 million tonnes in the first eight months of the current Iranian year.
They included 1.92 million tonnes of finished products, up 104% year on year, and 3.335 million tonnes of semi-fabricated products, down 21%.
Last month, head of the Iranian Steel Producers Association Bahram Sobhani said Iran is capable of producing 25 million tonnes of steel in the current fiscal year.
Steel and iron ore is a strategic industry for Iran whose developing economy heavily relies on construction.
Sobhani, however, gave a lower figure than AASIM’s 9 million tonnes in Iranian steel exports, expecting them to reach 7.8 million tonnes by the end of the year.
“At an average rate of $450 (per tonne), Iran’s steel exports will total $3.5 billion,” IRNA quoted him as saying.
Iran also imports steel, mainly stainless, flat and pipe products from CIS states, China and the EU, with Parvan expecting them to remain around 4 million tonnes this year.
AASIM operates an engineering consultancy with an Indian partner in the Iranian iron, steel, mining and chemical sectors, according to Platts.
Iran plans to boost steel output to 55 million tonnes a year by 2025, of which 10-15 million tonnes would be earmarked for export.
Currently, domestic steel consumption remains flat due to stagnating construction and car manufacturing industries which use up much of the steel needed in Iran.