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Balance in production chain vital to sustainable development: MSC managing director


Striking a balance throughout the country's steel production chain, from extraction of iron ore from mines to the roll-out of the end products, is instrumental in the growth and sustainable development of the steel industry, and an across-the-board balance as such should be struck by the industry itself, Managing Director of Mobarakeh Steel Company (MSC) Dr. Bahram Sobhani said when the managing director and board members of Iran Mercantile Exchange went on an inspection tour of the steel company.
He went on to say that his company seeks to produce 25 million tons of crude steel annually in line with what is envisioned in the 2025 steel industry outlook.
As for the performance of MSC over the past four years, he said in the 12 months to March 20, 2013, MSC produced 6.65 million tons of crude steel. It jumped to 7.5 million tons in the 12 months to March 20, 2017. We have planned to raise that figure by 30 percent to 8.63 million this year [ends March 20, 2018]. We have been ahead of schedule in the first four months of the current year. The capacity increase over five years ago is 38 percent. MSC has invested around 53 trillion rials in projects within and beyond its plants, with all of the capital in question coming from its internal sources.
He said a project in Sangan to produce 5 million tons of concentrates will be launched in the second half of 2018. The project to raise the production capacity of Saba Steel Complex from 750,000 tons to 1.6 million tons is already finished and set to be inaugurated. Besides, steel production at MSC has risen from 5.4 million tons to 7.2 million tons. In addition to expansion, qualitative improvement has also been on the agenda. Production of ribbed sheets at Saba Steel Complex, addition of degassing equipment, production of automotive sheets, launch of a desulfurization system and production of API steel sheets used in natural gas and sour oil transfer pipes as well as in maritime industries are some of these projects. MSC has two future joint projects with the Europeans: one is to increase the capacity of Hormozgan Steel Complex from 1.5 million tons to 3 million tons, and the other features a 3-million ton Hot Rolling plant at Shahid Kharrazi facility.
We view the economy as a package including different parameters. One cannot control some and ignore others, the MSC chief said, adding we need to accept the fact that the Mercantile Exchange provides the best mechanism to make that happen. In case there are problems on the exchange, they need to be settled. When it comes to the pricing of steel sheets, the Competitiveness Council does not work.
He said the Mercantile Exchange was launched to set prices based on supply and demand. If the Competitiveness Council manages the prices of steel sheets, it should control the prices of raw materials such as iron ore and natural gas steelmakers widely use. In fact the system needs to see the whole picture because it is more like a chain with many links. Indeed, Mobarakeh Steel and the exchange play no role in pricing. The buyer and seller come to an agreement, and the only thing the Mercantile Exchange provides is an environment for their negotiations.
For his part, the managing director of the Mercantile Exchange said steel sheets are among products which are vital to production of several other items, adding if steel sheets are not produced locally, we will have to rely on their imports, which in turn, compromise the quality of end products.
Hamed Soltaninejad recalled the importance of local production of steel sheets and said there are challenges facing the steel sheet market and that the Mercantile Exchange does have the potential to serve the interests of both upstream and downstream units, a happy medium that can help us come up with a model to determine perfect prices on the market.
He went on to say that transparency is a must for both upstream and downstream industries in the Mercantile Exchange, adding transparency in exports should be matched by transparency in imports, adding light must be shed on the pricing of imported items and their allocation to industries.
He said the shares of all units involved in the steel industry chain should be on offer on the stock market, adding transparency in just one section of the production cycle won't serve the interests of production; rather, the whole thing, including price-setting, should be transparent.
Soltaninejad further stated that the supply of raw materials and goods is the edge Mobarakeh Steel holds when it comes to offering its products on the Mercantile Exchange, adding proper and effective distribution of intermediary goods among downstream industries is one of the most important missions of the Mercantile Exchange.
When it comes to products such as steel sheets, allocation is as important as pricing, he said, adding this does not simply apply to locally-manufactured steel sheets, rather to imported sheets as well.
Mobarakeh Steel Company is the largest industrial complex in the country and the biggest producer of flat sheets in the Middle East.
It accounts for 50 percent all steel produced in the country and is currently valued at 200 trillion rials.
MSC's capacity to produce 12 million tons of sponge iron makes it the biggest producer of such iron in the world.
    


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