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Export-driven production necessary to secure goals envisioned in 2025 Steel Industry Outlook: MSC Chief


A host of senior industry officials, including Minister of Industries, Mines and Trade Mohammad Shariatmadari, and his deputy Dr. Jafar Sarghini, Chairman of the Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) Dr. Mehdi Karbasian, and Managing Director of Mobarakeh Steel Company (MSC) as well as members of Iranian Steel Producers Association and the mining industry experts were on hand for an 8th conference on the Iranian Steel Industry Outlook held at IRIB’s International Conference Center in Tehran (January 30-31).
According to the correspondent of Steel Newsletter, on day one of the two-day event, the MSC chief held a speech which, among other things, dealt with national steel production capacity; the necessity of planning to push up per capita steel consumption and identify target markets to be able to export 20 million tons of steel in 2025; the role of efficient technologies, both qualitative and quantitative, in steel production; the importance of optimal capacity; energy, human resources, and material productivity; and the role of proper plant location in securing the goal of producing 55 million tons of steel.
He then recalled the importance of raw materials in steelmaking and said more than 1 billion tons of scrap iron is estimated to exist in the world. In light of the fact that electric arc furnaces are more environmental-friendly than blast furnaces, steelmakers are more inclined to use electric arc furnaces. Thus, demand for iron ore declines over time. Industry analysts believe the increase in iron ore prices won't be proportionate to steel prices.
Dr. Sobhani then touched on the status of the steel industry in Iran and said according to estimates by the World Steel Association, Iran currently produces 21.7 million tons of steel. If the 55 million tons of production which is envisioned in the 2025 Steel Industry Outlook becomes a reality, Iran would be the 7th largest producer of steel in the world.
As for per capita steel consumption in the world, the MSC managing director said per capita steel consumption in Iran stands at 230 kg, against the global average of 208 kg. He went on to say that in Spain and Poland steel consumption stands at 273 kg and 340 kg, respectively. It's true that Iran's steel consumption is above global average, but it's lower than developed industrialized countries such as Germany and South Korea.
On the challenges the steel industry is faced with, he said if the provisions of the Steel Industry Outlook are realized – that is the country's population rises to 90 million and its annual steel production hits 55 million tons – we will have 20-25 million tons of surplus steel and there will be no other choice but export them.
The MSC chief also touched on the challenges facing exports and said exportation requires special approaches and has its own culture, adding downstream steel plants often place orders for the products they need four months in advance, so planning and proper marketing are essential to exports. We need to keep in mind that we cannot find our way into good export markets overnight. That means we need to work out detailed plans to hold on to export markets whether the local consumption grows or declines. That helps prevent foreign export markets, which are secured with difficulty, from being slipping away. 
What technologies should be used in steelmaking and where was the focus of another part of Dr. Sobhani's speech. As for exports, he said, “It is important to know what technologies to use in order to be able to supply products to global markets. We need to know what quality our products are and how much they cost.”
Dr. Sobhani described creation of optimal capacity as another challenge the Iranian steel industry grapples with and said, “In producing products for exports, our prices need to be competitive. Certainly small units which produce less than 1 million tons of steel cannot secure high added value. Only bigger units which feature a complete production chain can be competitive in steel production. Otherwise, different links in the chain will remain solely focused on their own profitability and after a short time small units with small output are forced out of the market.”
As for the importance of productivity in the steel industry, the MSC managing director said productivity should be taken into account on all industrial fronts, including raw materials. “We need to know how much steel we want to produce when a certain amount of raw material is fed into a steel plant. Besides, in the production process, all waste should be monitored and eliminated. We should also know what needs to be done when it comes to productivity of human resources. We need to know about the productivity of our global rivals and the amount of energy they use for each ton of steel they produce. Otherwise, success will be elusive when it comes to both local production and exports.” 
He described as “important” measures to cut the cost of transportation when it comes to both raw materials and final products. “When building a plant, if we pay attention to the location of the plant, to the technology it employs and to the complete chain of production in a single unit, we have to take giant steps toward cutting transportation costs. After all, when the production chain is scattered, a lot of unwanted costs are imposed on the production unit.”
He further stated that if raw materials are transported from mines to the facilities that produce pellets, sponge iron and crude steel, and those which handle the rolling process and turn steel rolls into other products, it would be impossible to have cost-effective production and make Iran’s presence felt on global markets. “That’s why expansion projects and plants which are close to each other and, of course, close to ports are economically justifiable.”
In conclusion, Dr. Sobhani said the challenges mentioned above are the main problems standing in the way of Iran’s steel industry. “If we can take into account these challenges when we plan for expansion projects and make proper decisions, we can create valuable opportunities in the steel industry. Only then will the production of 55 million tons of steel become a reality in the country, something which will in turn bring about productivity and benefits associated with cost-effectiveness.”


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