Iranian steel production fell for a
fourth consecutive month in May as domestic consumption continues to drop and
exports slide as a result of cheap Russian steel flooding the global market,
according to a new report.
One of the world’s
top 10 steel-producing countries, Iran’s decline of 10.8 per cent last month
far exceeds all other major countries, according to Rystad Energy in Oslo.
“The production
restraint of late is more to do with export reductions and demand in the
external market, which they [steel producers] say is being saturated by Russian
steels at heavily discounted prices,” said Alistair Ramsay, vice president of
Rystad.
Russia’s steel, oil
and other products have been hit by sanctions from western nations, including
the US and the EU, in retaliation for Moscow’s military offensive in Ukraine.
Russian steel demand
could slump 30 per cent, or 13 million metric tonnes, year on year in 2022,
S&P Global Commodity Insights said in March, citing the Russian steelmakers
association.
But Moscow has been
offering heavy discounts to boost sales in international markets.
“Russian [steel]
output has broadly stabilised so far this year [at -0.7 per cent after five
months] and not only outperformed Iran but most other major producing countries
this year, which is surprising given the war with Ukraine (where output has
collapsed) and barriers to Russian trade in Europe and the US,” Mr Ramsay said.
Iranian steel exports
were increasing before Russia attacked Ukraine, Rystad said.
Exports from the
country, largely semi-finished shapes consisting of slabs and billets, had
risen 25 per cent year on year to 7.7 million metric tonnes, in the Iranian
calendar year ending March 20, 2022, the report said.
Direct reduced iron
exports, which also compete with Russian options, and finished steels, also
rose by 20 per cent each during the period, it said.
“That final month
alone, when Russia’s invasion began, Iranian exports accelerated as more than
one million metric tonnes of semis [semi-finished steel] were shipped (85 per
cent up year on year) and almost 400,000 tonnes of steel, doubling the total
from the year before,” Rystad said.
Globally, however, it
seems more likely that demand is in retreat rather than Russia undergoing an
export boom, the report said.
“Steel prices remain
relatively depressed, and weak demand is encouraging all but Indian producers
to cut back.”
World crude steel
production for the 64 countries reporting to the World Steel Association stood
at 169.5 million tonnes in May 2022, a 3.5 per cent annual decrease.
The association forecasts that steel demand will grow 0.4
per cent in 2022 to reach 1,840.2 million tonnes.