Industry News

1、 Industrial foundation and supply characteristics
Concentration of local steel production capacity
Iran's annual crude steel production capacity is about 45 million tons, mainly concentrated in three major state-owned steel enterprises: Mubarak Steel Company (with an annual production capacity of 11.8 million tons, accounting for 50% of the country), Isfahan Steel Company (3.6 million tons, mainly long steel), and Khuzestan Steel Company (3.6 million tons). The government plans to increase production capacity to 55 million tons by 2025, with the goal of becoming the sixth largest steel producing country in the world.
Significant advantages in raw materials
Iran's iron ore reserves exceed 3 billion tons (with an iron content of approximately 1.4 billion tons), and its direct reduced iron (DRI) production technology is globally leading, accounting for 30% of global production in 2020. The abundant iron ore resources and low-cost energy support the competitiveness of upstream raw materials.
2、 Market demand and policy driven
Rigid infrastructure demand
Light steel keel is widely used in Iran's urbanization construction due to its seismic resistance, high construction efficiency (shortened by 30% -40%), and adaptability to prefabricated buildings, especially in the fields of public facilities and commercial building renovation.
Green policy orientation
The Iranian government is promoting the green transformation of the construction industry, and light steel keel, as an environmentally friendly and energy-saving material (with a recycling rate of over 90%), is in line with policy encouragement. However, the specific subsidy details and implementation intensity are yet to be clarified.
3、 Trade Structure and Risk Warning
The differentiation of export structure restricts the supply of raw materials
Iran's semi-finished steel exports continue to decline (down 22% year-on-year in the first 8 months of 2024), with slab exports sharply decreasing by 45%, while exports of raw materials such as ball ore and DRI increase by 9% -13%. The export policy is tilted towards raw materials, which may indirectly increase the production cost of local light steel keel.
Geopolitical conflicts impact supply chains
If the Iraq War escalates, the blockade of the Strait of Hormuz will lead to:
Key raw material supply interruption: Iran relies on imports from China for 60% of methanol and 40% of polyethylene, which may lead to a 30% weekly price jump due to conflicts;
Energy costs surge: Crude oil prices exceed $150 per barrel, and logistics costs for building materials increase by 15% -20%.
Copper ore transmission pressure: Iran has the third largest copper reserves in the world, and conflicts may push LME copper prices up to $12000/ton, affecting the cost of light steel keel supporting components.
4、 Suggestions for Corporate Strategy
Building Supply Chain Resilience
Establish long-term procurement agreements with local steel mills (such as Mubarak) to lock in the risk of slab price fluctuations;
Diversified raw material sources: methanol is being replaced by Xinjiang Guanghui Energy, and copper mines are linked to Jiangxi Copper Industry for hedging.
Localized production to avoid barriers
By utilizing the free trade zone tariff reduction policy (with an average discount of 12.5%), processing plants can be established in industrial zones such as Isfahan, with a localization rate of over 40% to reduce the risk of trade sanctions.
summarize
The Iranian light steel keel market has potential based on abundant mineral resources and green transformation demand, but is limited by the imbalance of steel export structure and the risk of geopolitical conflicts. Enterprises need to diversify their raw material supply chain (such as locking in domestic methanol and copper resources) and localize production to reduce costs and increase efficiency, while closely monitoring changes in the situation in the Strait of Hormuz