Iran Perspectives in Focus

Metal Expert
Iran Perspectives in Focus
December 2015
Nuclear deal to breathe new life
into Iran’s steel export
Khouzestan Steel’s billet export
potential yet to be unleashed
Mobarakeh Steel:
exports the only way out
of recession in Iran
IGISCO:
EAF producers should become
more aware of DRI use

• Iran’s exporters
• Square billet buyers in Turkey
and MENA
• Prospective exporters of high
added value products to Iran
• Iranian end-user’s representatives
• Equipment manufactures
• Traders
• Analysts
WHO SHOULD ATTEND?
25 May, 2016, Tehran, Iran
3
RD
Iran Steel Perspectives
Conference
Metal Expert Conferences
Market Opportunities
The removal of sanctions will open up new
opportunitiesforlocalsteelexporters,especially
from the private sector, as well as numerous
consumers in neighboring countries.
Simultaneously, opening economy is going
to revitalize Iran’s domestic consumption of
high value added products such as thin ﬂat steel
and coated products, tubes and pipes, plates
and others.
MARKET OPPORTUNITY
• Prospects of substituting scrap with Iranian
billet in Turkey
• Iran’s square billet shipments to GCC instead
of the material from CIS and China
• Prospects of sheet and coated steel import
to Iran
• Modernization of Iran’s oil and gas sector –
anewopportunityfortubesandpipesuppliers
• Prospects of plate imports for shipbuilding
• New technologies and equipment for Iran’s
steel downstream
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Iran Perspectives in Focus | December 2015 | 3Metal Expert
Market overview
Leading steelmakers keep operation rate high despite
tough market 27
Iran likely to meet export targets for current year 28
Tehran strengthens cooperation with Asia in mining
and steel sectors 29
Crude steel production expected at 18 million t in Iran 30
Steel exports to double this year 31
Turkey – Iran free trade zone to boost steel trade
between countries 31
Turkey’s plan to raise exports to Iran doubtful, prospects
for imports look better 32
Contents
Top companies
potential yet to be unleashed 11
Availability of natural gas and iron ore
resources together with the predominant
use of DRI-based steelmaking technology
makes billet production in Iran extremely
profitable.
Mobarakeh Steel: exports the
only way out of recession in
Iran 14
Despite the approaching removal of
sanctions the Iranian domestic steel
market still leaves much to be desired.
Esfahan Steel reveals threats
and opportunities of Iranian
longs market 17
Considering toughening market
conditions both inside the country and
in the global market, Iran’s largest longs
producer Esfahan Steel Company (ESCO)
is looking for the ways to increase its
competitiveness and improve financial
position. During Metal Expert’s Iran Steel
Perspectives Conference, which took place
in Istanbul, Nematollah Mohseni, ESCO’s
Deputy Managing Director in Sales and
Marketing revealed challenges of the
modern domestic and global markets and
told about the company’s policy in these
conditions.
Interview
IGISCO:
more aware of DRI use 20
Today Iran is the
second largest DRI
producer in the
world. However,
being extremely rich
in natural resources,
after removal of
sanctions it has
potential to become the leader of the
segment and cover the needs of both
local and foreign customers.
featured
Steel projects in Iran remain
postponed as sanctions to be
removed from January 2016 7
Despite the US Senate‘s vote to lift
sanctions, it is now clear that the removal
of economic restrictions against Iran
will start not earlier than the beginning
of 2016. Therefore, many projects, in
steel sector in particular, are now being
postponed until the improvement of
financial environment in the country.
Iran in figures
event
Iran Steel Export Perspectives
Conference:
Promising future
in challenging market 24
Iranian mining
Iran plans $29 billion investment
in mining and steel industry
to balance production chain 33
Yazd Rolling Mill to
strengthen positions
in raw materials market 34
MIDHCO expands despite
tough economic conditions 35
Iran may stop iron ore
exports starting
from March 2016 36
India’s KIOCL to partially
cover Iran’s pellet need 37
Neyriz Ghadir Steel Company
to supply local market with
DRI by end‑2016 38

4 | Iran Perspectives in Focus | December 2015 Metal Expert
editorial
Over the period of the international
blockade, Iran’s steel market has steeply
contracted as the economy ran out of
necessary investments. As a result, not all
local steelmakers positioned themselves for
a steady expansion, as capacity utilization
at some private mills was less than 40%.
The only bright spot was growing steel
exports at the state-owned steel giants, like
Mobarakeh Steel Company and Khouzestan
Steel Company, and, to some extent, the
implementation of several mining and DRI-
projects by the IMIDRO members. But those
days are almost gone!
The approaching removal of sanctions
will, first of all, open up new opportunities
for Iran’s exporters, especially from the
private sector. The country is likely to
meet the export targets set for the current
Iranian year (4 million t), as in the first
6 months it sold 1.8 million t. Iran set a
goal to export around 10 million t of steel
products for the long-term perspective.
In fact, local producers are already busy
trying to meet the needs of the foreign
customers by increasing production
capacities, diversifying production portfolio
and introducing competitive prices, which
means Iran’s export potential is yet to be
unleashed.
A huge stimulus of opening economy is
going, though not immediately, to revitalize
domestic consumption in Iran for different
kinds of steel goods, from rebar to rails, flat
products and pipes. The economic freedom
will gradually let unfreeze construction and
infrastructure development projects, expand
oil and gas pipelines, automotive sector and
shipbuilding.
Metal Expert has great pleasure to present
its special review with a focus on Iranian
market and one of today’s most topical
segments – export. In this publication, Metal
Expert is trying to evaluate the current
situation and the perspectives of the Iranian
companies in international steel market. It
contains analysis on Iran’s export potential,
featured materials about major steel
producers and exporters, interview with Iran
Ghadir Iron and Steel Company (IGISCO)
and other important and interesting
information, which, hopefully, may help you
in your business.
Enjoy your reading!
Andrey Pupchenko
Deputy Managing Director
Metal Expert
Iran ready
for new
opportunities

Nuclear deal
to breathe new life
into Iran’s steel
export
A 12-year stand-off between Iran and
the West seems to come to an end as
the parties have finally worked out
a draft nuclear agreement. Yet, some
issues are yet to be resolved for the
agreement to come into effect. The
deal is crucial for Iran as a return to
the international arena will breathe a
new life into the country’s economy,
steel sector in particular.
Under the agreement, official Tehran is to
cut its uranium enrichment capacities by
70% and to utilize its stored reserves by
end‑2015 in exchange for gradual relief from
sanctions. The sticking point now is in Iran’s
decision whether to provide UN inspectors
the access to all suspect sites or not. The
next step on the way for sanctions removal
will be final agreement and UN Security
Council resolution adoption. However, if the
deal is violated, a “snapback” mechanism
will work and part of sanctions will regain
power in 65 days.
In the steel segment, exporters will be the
first to feel the improvement already by the
end of 2015. The reason is that international
money transfer problem, one of the major
obstacles for successful trade, will be
solved soon. For now, only big mills, mostly
state-owned, have a possibility to sell goods
abroad. In particular, 90% of this year’s
export target of 4 million t will be covered
by Mobarakeh Steel (50%) and Khouzestan
Steel (40%). However, as Iran’s banking
system starts to join SWIFT, new steel
exporters may enter the market. In July, one
of Iranian private banks – Day Bank – was
the first to come back.
A thaw in relations between Iran and
international community will support the
Featured

Featured
inflow of investments to national economy
starting from the next year, particularly
in construction, one of the major steel
consumers. “The problem of Iranian market
is the lack of financing in consuming
industries. Only when it is solved steel
market will get balanced in terms of supply
and prices. We will see the first changes
no sooner than the end of this year, when
the real result will show up by mid- or
end‑2016,” a market insider told Metal
Expert. Growing demand will spur local
steel production, which is now underloaded.
According to Metal Expert’s data, Iran’s
current total long steel capacities account
for around 19 million t, with some mills
running at less than 50%.
In a long-term prospect, market participants
do not rule out a rise in steel imports,
but “the suppliers will more probably be
targeting the segments that are not so
developed in Iran, such as merchant bars,
sections and rails.”
„„ TheproblemofIranianmarketis
thelackoffinancinginconsuming
industries

Featured
Steel projects
in Iran remain
postponed as
sanctions to be
removed from
January 2016
Despite the US Senate’s vote to lift sanctions, it is now clear that
the removal of economic restrictions against Iran will start not
earlier than the beginning of 2016. Therefore, many projects,
in steel sector in particular, are now being postponed until the
improvement of financial environment in the country. Nevertheless,
Iranian mining and steel companies continue to prepare the
ground for the investments by conducting feasibility studies and
researching the market to diversify the future economy.
In September Senate Democrats supported
President Obama and preserved the deal
he and international leaders struck to
curtail Iran’s nuclear program. With the
green light from the US side, the nuclear
monitoring process necessary for sanctions
cut will probably be in place by January or
February 2016, according to International
Atomic Energy Agency (IAEA) envoys,
which means restrictions will last until
March. Information that Iran does not
give IAEA investigators enough access to
Iranian facilities was dismissed. “There is
no particular concern that the IAEA will not
be able to complete a final assessment on
„„ IranhadturnedtotheEastdue
tosanctions,nowopportunities
areopeningupwiththeWest

Featured
time,” IAEA Director-General Yukiya Amano
commented to Bloomberg.
Sanctions removal will open the door
for the inflow of long-awaited foreign
investments as Iranian banks do not have
capacity or liquidity to finance the projects.
During the last four years of sanctions,
Iranian banks could not use international
financial transaction systems. They were
mainly confined to retail banking, and their
balance sheets deteriorated despite liquidity
injections from the government. “There are
lots of projects but no money, so they are
looking for overseas sources,” said Mehrdad
Parhizkar, a partner at Dubai-based
consulting company Frontier Partners, in his
interview with MEED. However, according
to market insiders, it may take a year before
large multinational banks from Europe move
to the Iranian market as they had to pay
heavy fines for sanctions violations. This
means Iran will continue to look for support
from Asian banks that are less restricted
by American institutions. “Because of
sanctions, Iran had turned to the East. Now
that opportunities are opening up with the
West, Iran is unlikely to turn its back on old
friends,” added Mr. Parhizkar.
Iranian mining and steel companies are
waiting for the inflow of foreign investments
like no other as this sector is expected to
diversify oil-based economy of the country.
“Oil is a highway for Iran’s economy.
However, since its price is falling dramatically
we need a sideway, which is steel. But to
achieve that Iran needs investments for the
industry development,” Asadollah Farshad,
Managing Director of Iran Ghadir Iron and
Steel Comapny (IGISCO), commented to
Metal Expert. For this reason many steel
projects that are not of urgent need in Iran
are being postponed for 2016‑2017. “Many
mills postpone expansion plans dedicated
to finished steel, they focus on raw materials
processing projects to balance their
production chain and be competitive,” one
local producer said.
„„ OilisahighwayforIran.
weneedasideway,whichissteel

Featured
Sanctions removal
promises bright
future for Iran’s
line pipe and OCTG
segments
Today, as the USA and the EU finally
approved conditional waivers,
Iran is close to sanctions removal
and economic recovery as never
before. Iran, which has one of the
world’s largest natural gas and oil
resources, will increase oil-and-
gas production and strengthen
its position in the global market,
as soon as it is liberated from the
pressure of international blockade.
The expansion plans in the sector will
promote both welded and seamless
pipe consumption in the country,
which shrank significantly over the
years of the economic blockade.
In the pre-sanctions period, Iran’s large
diameter pipe consumption was above
1 million tpy, of which a significant volume
was produced domestically, mainly by
Ahwaz Pipe Mills, Sadid Industrial Group
„„ Theestimatedpipesconsumption
forlinepipeprojectsisaround
3 milliont

Featured
and Safa Industrial Group. A total
large diameter pipe (20‑120” OD)
production capacity of those mills is
around 2.5 million tpy. Import was
also an important part of this market.
According to Metal Expert data, in
2010 welded pipe import amounted
to around 532,000 t, while in 2013 it
dropped to just 165,000 t and to less
than 50,000 t in 2014. Among major
foreign suppliers were China, India,
France and Germany.
Holding around 34 trillion cu m natural
gas reserves and planning to double the
annual production to 400 billion cu m
per year by 2020, Iran has a lot to do to
expand and renovate the pipeline. Iran
Gas Trunkline (IGAT), a series of 11 large
diameter pipelines transferring natural
gas inside and outside the country, is
the core of the country’s gas pipeline
network. Today, Iran has 36,000 km of
high-pressure gas transmission lines and
264,000 km of distribution network lines,
while 4 projects (IGAT 6, 7, 9 and 11) are
underway. According to National Iranian
Gas Company (NIGC) assessment, when
they are completed (by 2020), high-pressure
transmission lines length will reach 41,000
km. The estimated pipes consumption for
those projects is around 3 million t. This
means Iran has great potential for the growth
of domestic and import line pipe demand.
Former suppliers of pipes are expected to
come back to Iran as early as end‑2016.
“Sanctions cut is to stimulate oil and gas
sector projects as well as to remove banking
problems. If the market situation follows this
scenario we will come back to business in
Iran on a pre-sanctions level,” commented
ChelPipe Group press secretary.
The future of Iranian OCTG segment is
bright as well. The country’s oil reserve
is estimated at 158 billion barrels and
Iran expects to use this benefit despite
the global oil market crisis. Iran currently
produces 2.8 million barrels per day, with
50% of this volume meant for export. As
soon as international sanctions are removed
together with a ban to export more than
1.5 million bpd, Iran is ready to increase
production by at least 500,000 bpd within
the next six to twelve months. In a long term
perspective Iran expects to raise the output
by 1 million bpd, the local media report.
Recovery of the drilling activity will lead to
increased OCTG consumption. The first
positive results will be seen by 2017.
However, unlike in case of the line pipe,
OCTG segment will be more dependent
on import. Currently, Iran has few OCTG
producers – Iran National Iron and Steel
Group (INSIG) and Luleh Gostar Esfarayen
Company – with a total capacity of around
200,000 tpy, while projects at other mills
are either postponed or in the stage of
development. Traditionally, China has
been the major OCTG supplier to Iran.
According to Metal Expert data, over the
years of sanctions import has been around
300,000 tpy on average. In 2013, however,
this figure dropped to 200,000 t but in 2014
it recovered to the usual level. Considering
the prospects of 1 million bpd oil production
increase in a mid-term, Iran may increase
OCTG import to more than 450,000 t. “We
will obviously be there to work with them,”
a source from France’s Vallourec said.
„„ Iranmayincrease
OCTGimporttomore
than450,000t

Top companies
Khouzestan
Steel’s billet export
potential yet to be
unleashed
Availability of natural gas and
iron ore resources together with
the predominant use of DRI-based
steelmaking technology makes
billet production in Iran extremely
profitable. Thus, over the years of
sanctions the country developed
and continues to work over semis
capacities ample to cover not only
the needs of the local market, but
also to turn into one of the Middle
East’s biggest suppliers.
Today, despite international sanctions still
being in place, Iran is already strengthening
its position in billet export market, in particular
in the region. Currently, the major supplier
is Khouzestan Steel Company (KSC), which
targets to export 1.5 million t of semis in 2015.
What makes billet segment attractive for Iran
is competitive production cost even compared
to Chinese mills, which are still offering the
lowest prices. According to Metal Expert
assessments, it stands at the level of around
$174/t, considering $33/t iron ore price and
availability of DRI module, like in case of KSC.
To compare, BOF-based billet production
cost in China at $39/t the price of charge was
assessed as $240/t for December.
„„ CostofbilletproductioninIran
iscompetitiveevencomparedto
Chinesemills

Top companies
Iran’s current capability to produce billet
stands at around 15 million t, while longs-
making capacity – at almost 19 million t.
According to market player’s assessments,
in 2014 general capacity utilization rate of
longs rolling mills in Iran did not exceed
45%. Consequently, under idled billet-
making capacities Iran hides at least
4.5 million t export potential for the moment.
However, not all the mills will be able to
realize it successfully due to geographical
position inside the country, as most of them
are situated closer to the north and center.
Nevertheless, Iran has vast expansion
plans in the segment of billet. New projects
are predominantly situated closer to the
southern border of the country in Kerman,
Fars and Khouzestan provinces. “The
development of the South of Iran means it
will be more export-oriented, while old mills
will be mostly covering the needs of the
local market,” Iranian producer commented
to Metal Expert. This means that the real
export potential of Iran is yet to be unlocked.
In 2015‑2017 the country is planning to add
13.2 million t of billet and around 3 million t
of longs-rolling capacities. Taking into
account the lack of financing and long
period for project implementation Iran
„„ Iran’s potential for billet
export is around3 million t
over2016-2017
„„ Billet production costs,exw
174 180
236 240
258 261
292
309
0
50
100
150
200
250
300
350
Iranian from local
iron ore/DRI (at
$33/t)
Russian from
local iron ore/DRI
(at $29/t)
Ukrainian from
local iron
ore/BOF (at
$17/t)
Chinese from iron
ore/BOF (at
$39/t)
UAE from iron
ore/DRI ($78/t)
Iranian from local
DRI (at $123/t)
Turkish from USA
scrap (at $195/t)
Iranian from
scrap (at $160/t)
$/t

Top companies
is unlikely to commission all above mentioned mills.
Despite this the country’s potential for billet export is
still impressive – around 3 million t over 2016‑2017,
according to Metal Expert assessment.
Yet, the success of Iran in the global market
will depend on its ability to adapt to the pace
of price movement and needs of the customers. “Iran
has promising future as an exporter, however,
over the years of international blockade it lost
the pulse of the world market. It does not refer to the
quality of the products, but ability to work in
fast-changing environment with high level of
competition,” a Turkish producer said during the
2nd Iran Steel Perspectives Conference in Istanbul
held by Metal Expert.

Top companies

Top companies
Mobarakeh Steel:
exports the
only way out of
recession in Iran
Despite the approaching
removal of sanctions the Iranian
domestic steel market still
leaves much to be desired. For
this reason Iran’s largest flat
steel producer Mobarakeh Steel
Company (MSC) is now trying to
expand the share of exports,
especially in Europe, and
diversifies its product portfolio
according to the needs of the
market.
Economic downturn and lack of investments
over the years of sanctions have
significantly influenced steel consumption
in Iran. Automotive industry seems to be
one of the few that started to revive, while
construction, HVAC and pipe segments
remain weak. In these conditions local
producers seek for opportunities in the
foreign outlets. “Increasing exports is the
only way out of recession,” former CEO
of MSC Mahmoud Eslamia commented to
local press. This Iranian year (March 21,
2015 – March 20, 2016) the company
targets 2 million t exports, a 35% rise y-o-y.
Out of the planned volume around 80% will
be represented by HRC, while remaining
20% – by CRC, HDG and PPGI.
In the geography of sales around 60% will be
destined for Europe, mainly for commercial
and automotive sector. To meet the needs
of the market MSC, a traditional producer
of 2.3‑16 mm HRC, enlarged its flats range.
Recently the company started productions
of ultra-tensile steel sheets DD14 3 to 4 mm
thick and 1,270 to 1,515 mm wide.

Top companies
First batches have already been sent to
European customers. “This special product
can be applied for manufacturing cold-
rolled coils (IF grade) and galvanized tensile
grades used specially for automobile bodies,”
company officials said. For the commercial
segment, in July the producer also opened
up thin coil production within unprecedented
dimensions 1.8x1,200, 2x1,350 and 2x1,450,
Metal Expert reported earlier. “MSC has
always been active in EU but now with a
completion of basket it can have better
chances,” the company representative told
Metal Expert.
The remaining 40% of export shipments
will be made to the Middle East and Asia,
where the producer, supported by growing
demand from pipe and HVAC segment, will
be able to find the market. Demand for the
conditioning systems in the MENA region
is expected to add 5.4% annually until 2018
reaching $6.17 billion in money terms, local
publication Trade Arabia reports. As for
pipe consumption in the region, Iran only
has around 7,000 km projects to be built in
2015‑2016.
Over the first seven months of 2015 MSC
produced 45% of Iran’s steel output –
4.3 million t. Up to 25% of this volume
was exported. “I believe we are working
according to the schedule,” the MSC
representative added.

Top companies
Esfahan Steel
reveals threats
and opportunities
of Iranian longs
market
Considering toughening market
conditions both inside the country
and in the global market, Iran’s
largest longs producer Esfahan
Steel Company (ESCO) is looking
for the ways to increase its
competitiveness and improve
financial position. During Metal
Expert’s Iran Steel Perspectives
Conference, which took place in
Istanbul, Nematollah Mohseni,
ESCO’s Deputy Managing Director
in Sales and Marketing revealed
challenges of the modern
domestic and global markets and
told about the company’s policy
in these conditions.
Iran is ranked as one of the largest
longs producers in the Middle East
– around 55% of the region’s output.

Top companies
According to ESCO report, in 2014 Iran
produced 8.3 million t of longs. Since
ESCO sells more than 85% of its output to
domestic customers, local threats remain
major concern for the company. With
2.7 million tpy longs making capacity last
year ESCO’s held 58% of domestic beam
market and 13% of rebar market. “Last year
ESCO increased its share of beam and
rebar market by 3% and 2%, respectively.
However, excess capacities and cheap
import slow down further growth,” said
Nematollah Mohseni. According to Metal
Expert’s data, around 1 million tpy of
longs making capacities will be added
in 2016‑2017 in Iran while utilization of
most existing mills does not exceed 50%.
In addition, the producer emphasized
such domestic and global challenges
as economic recession and continuous
decrease in oil prices, lower housing
construction and reduction of steel price.
Thus, ESCO builds its development strategy
based on existing opportunities. As Iran
plans to extend its railway network from
13,000 km to 25,000 km by 2025 ESCO
is diversifying its product portfolio and
entering more profitable niche segments like
rail production. The company will upgrade
its operating rail and beam mill (700,000 t)
and build a new one (1 million tpy), which
will allow it to focus on high value-added
products. Besides that, the producer eyes
to make use of sanctions removal. “The
lift of sanctions means improved domestic
consumption from construction sector and
infrastructure development segments (ports,
railroads, pipelines) as well as ease of
export operations,” added Mr. Mohseni.
Last Iranian year (ended March 20, 2015)
ESCO produced 2.7 million t of steel setting
a record and reaching 100% capacity
utilization of rolling mills, according to
company officials.
„„ Iran produces around55%
of longs in the Middle East
„„ The lift of sanctions will
improve domestic consumption
and ease export operations

Top companies

Interview
IGISCO:
EAF producers
should become
more aware of
DRI use
Today Iran is the second largest DRI producer in the world. However, being
extremely rich in natural resources, after removal of sanctions it has potential
to become the leader of the segment and cover the needs of both local and
foreign customers.
At Iran Steel Perspectives Conference held in Istanbul, Metal Expert
met Asadollah Farshad, Managing Director of Iran Ghadir Iron and Steel
Company (IGISCO), who told us about the prospects of the country as a DRI
producer.
Could you, please, say more about the company’s performance, raw materials
sources and customers?
IGISCO was founded in 2006 in Ardakan
city, Yazd province. In 2007 we started to
establish MIDREX plant to produce DRI.
The production itself started in 2011 with
the capacity of 800,000 t.
We get iron ore pellet from Chadormalu
Mining and Industrial Company (CMIC). It is
close to our company and it is also one of
our main shareholders. For this reason we
are not in hard condition with raw materials.
The main customers in Yazd are Iran Alloy
Steel Company (IASCO) and Yazd Rolling
Mill. Most of our clients are from private
sector mainly with EAF technology, but
there are also some smaller producers
with induction furnace technology. Also we
are selling products to Khouzestan Steel
Company (KSC), Mobarakeh Steel Company
(MSC), Iran National Steel Industrial Group
(INSIG) and other steel producers in Iran and
abroad.

Interview
What makes DRI production in Iran so profitable?
The answer is good natural gas basis. If
you look at the world DRI production, which
in 2014 was about 75 million t, you will see
that the main share belongs to the MENA,
where natural gas resources are ample.
However, India, the number one world DRI
producer, is not based on gas availability,
but coal. Out of last year’s Indian DRI output
of 17 million t, more than 65% was produced
on coal basis. But they are using low quality
coal. Thus, with availability of high quality
natural resources Iran will become the first
world DRI producer.
How does the Iranian DRI market work? What is the share of producers that
supply DRI to the free market and what is the share of those who produce it for
their own needs?
I suppose every big producer like MSC and
KSC is producing from pellet. This means
the chain of their production is balanced. The
remaining steelmakers mostly do not have
pelletizing plants. For this reason they need
some quantity of DRI when their MIDREX
capacities are on maintenance. Then they
buy from us. All the private sector has no
DRI plants, for this reason they need us.
Now Iran has capacity to produce
17.5 million t of DRI, I would say around
3 million t from this volume is for the free
market, which is 20%.
And how will the Iranian DRI market be developing in your opinion?
In 2025 we will have capacity to produce
50 million t of DRI. It means if we produce
50 million t of steel we have sufficient
raw material. But if our steel capacity is
less than this figure we will be able to
export. If you look at the world trend for
raw materials most of the producers use
scrap, however its resources are quite
limited. For this reason steel producers
should think and plan to prepare raw
material for the future. Now global DRI use
in EAF production is around 18%. It means
remaining 80% is fed with scrap and pig
iron. EAF producers should become more
aware of DRI use, especially for high
quality steel.
„„ Iran will become the first
world DRI producer

Interview
Iran’s major problem now is the lack of pellets. And as you said DRI production
will be growing. How will the issue of pellets lack be solved?
There are many projects for pellets
production now. Because of sanctions
we had some difficulties in investment.
I suppose with their removal many
investors will look for the activity here. The
highway of economy in Iran is oil industry
now. We need a sideway which is mining.
If we have sufficient capital we have
capability to increase our capacity for iron
ore pellet even to 100 million t, they can be
converted into 70 million t of DRI.
So this means Iran will have significant DRI export in the future? It is forecast
that Turkey can be a possible buyer. What do you think could be other
destinations?
The free volumes can be exported to the
Middle East, North Africa, Turkey, and
Azerbaijan. But do you know the exact
meaning of this capability? The DRI we
will export is equal to energy. It means we
will also be exporting natural gas. Look
and think about the main issue of the
scenario I told you. Here you have iron ore
concentrate. To change it into pellet you
need natural gas, at least 30 m cu/t. Then
you want to produce DRI which needs 280
m cu of gas to produce 1 t. It means when
I export 1 t of DRI to Turkey I also export
310 m cu of natural gas.
In this regard does IGISCO have any expansion projects?
As a 25% shareholder of Golgohar Mining
& Industrial Company we are investing
to establish two 1.7 million t mega DRI-
modules at Sirjan, Kerman province.
The first module will come in operation this
September. And the second one will be
commissioned next year.
To sum up our conversation, do you believe that after sanctions removal the
international raw materials market will have more influence on Iran? What can
be the effect of it?
I suppose sanctions removal will open
new opportunities for the steel market.
I’m sure we will face some advantage for
export. However, we should work hard
on the economical function: increase our
productivity, optimize production cost, labor
and energy cost to be competitive in the
global market.

Актуально
0,0
3,0
6,0
9,0
12,0
15,0
18,0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
0,0
3,0
6,0
9,0
12,0
15,0
18,0
21,0
2008 2009 2010 2011 2012 2013 2014
0,0
3,0
6,0
9,0
12,0
15,0
2007 2008 2009 2010 2011 2012 2013 2014
45%
21%
14%
4%
2%
1%
13%
Mobarakeh Steel Company
(incl. subsidiaries)
Khouzestan Steel Company
Esfahan Steel Company
Khorasan Steel Company
Iran Alloy Steel Company
Iran National Steel Industrial
Group (INSIG)
Others
750;
40%
700;
8%
400;
22%
Mobarakeh Steel
Company
Khouzestan Steel
Company
„„ Steel export by companes in H1,
current Iranian year
thousandt,%
„„ Crude steel output by major
producers in H1,current Iranian year
%
0,0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
0,0
3,0
6,0
9,0
12,0
15,0
18,0
21,0
2008 2009 2010 2011 2012 2013 2014
0,0
3,0
6,0
9,0
12,0
15,0
2007 2008 2009 2010 2011 2012 2013 2014
45%
21%
14%
4%
2%
1%
13%
Mobarakeh Steel Company
(incl. subsidiaries)
Khorasan Steel Company
Iran Alloy Steel Company
Iran National Steel Industrial
Group (INSIG)
Others
750;
40%
700;
8%
400;
22%
Mobarakeh Steel
Company
Khouzestan Steel
Company
Iran in figures
„„Crude steel production
milliont
„„DRI production
milliont
„„Apparent steel use
milliontoffinishedsteel
0,0
3,0
6,0
9,0
12,0
15,0
18,0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
0,0
3,0
6,0
9,0
12,0
15,0
18,0
21,0
2008 2009 2010 2011 2012 2013 2014
0,0
3,0
6,0
9,0
12,0
15,0
2007 2008 2009 2010 2011 2012 2013 2014

Iran Steel Export Perspectives
Conference:
Promising future
in challenging
market
The agreement for sanctions
removal, signed in June 2015
heated the interest of global steel
market participants to Iran and
gathered them at Iran Steel Export
Perspectives Conference in Istanbul
on September 4, 2015. Steel and raw
materials market participants flowed
together to discuss the future of
Iranian industry and its problems.
Attendees were Iranian, the UAE, the CIS,
European and Chinese representatives,
which have become traditional counterparts
over the past several years, as well as
Turkish ones, that are eager to resume
cooperation with this destination. The scope
of the event covered the most pressing
issues of Iranian steel market such as
local and export market perspectives,
existing and needed technologies as well
as cooperation in the region. Among the
speakers were such majors as Khouzestan
Steel Company, Esfahan Steel Company,
Colakoglu Meatlurji and Yolbulan Bastug
Metalurji. Metal Expert also presented its
vision of Iran steel export perspectives and
competitiveness in the Middle East.
The main concern for Iranian producers
remains weak local market sentiment,
caused by consuming industries crisis,
which makes them look for the ways out of
recession. One of them is increased export
volumes. This Iranian year, the country
plans to double the volume of shipments to
event

event
the foreign outlets, to 4 million t, which will
be mainly represented by semis and HRC.
Another problem is global descending price
trend and cheap import material, mainly
from China, that harms local producers,
despite duties raised since the beginning of
the year (March 20, 2015).
Another part of the conference covered
the issues of technologies and machinery.
Since in pre-sanctions period Iran was
mainly targeted at re-rolling and thus
dependant on import semis, after the
implementation of international blockade
it started to work over the expansion of
its own steelmaking capacities. Having
succeeded at this, Iran, however, now lacks
capacities to produce agglomerated iron
ore and DRI and is actively working over
balancing the production line, waiting for
the sanctions removal. Besides that, many
existing mills now need to be upgraded to
meet the needs of the global market.
The event was summed up by the speech
of Turkish delegates expressing readiness
to renew cooperation with Iranian side after
sanctions removal. Turkish representatives
now see Iran not only as a customer but
also as a potential supplier, in particular in
the segment of semis. However, Turkish
side noted that “Iran has promising future
as an exporter but over the years of
international blockade it lost the pulse of
the world market. It does not refer to the
quality of the products, but ability to work in
fast-changing environment with high level of
competition.”

event
„„ Speakers and topics:
Mete Sahin
Long Products Sales Manager
Colakoglu Metalurji AS
Basic figures of Turkish steel industry
and recent changes due to semi-
finished products international markets
Nematollah Mohseni
Deputy Managing Director in Sales & Marketing
Iranian Long Steel Market,
Opportunities and Threat
Asadollah Farshad
Managing Director
Iranian Ghadir Iron and Steel Co (IGISCO)
World DRI Current Situation:
Production, Demand, Trade and Export
Mehmet Cakmur
Sales Director
MMK Metalurji
Turkish Flats market and possible
opportunities when Iran comes back to
steel market
Pavel Vorobev
Corporate strategy department
Severstal
Major trends for the future development
of the global steel industry
Andrey Pupchenko
Deputy Managing Director
Metal Expert
Iran steel export: perspectives and
competitiveness in the MENA region
Emrah Ugursal
Foreign Trade Manager
Yolbulan Bastug Metalurji
Overlook of Turkish steel industry and
position in the Middle East: comparison
of the position of Turkey with that of
Iran in the region
Iraj Salehi
Chairman & Technical Director
Barsoo Engineering Company
Iran's Steel Development facts &
Investment Promoting Projects
Andrea Diasparro
Vice President
Danieli
Danieli MicroMill – The winning choice
in Capex & Opex to produce Bars and
Wire Rod from Scrap
Mehran Abbas Zadeh
Strategic Planning Manager
Export of Billet from Iran to MENA
market
Johann Kriechmair
Senior Consultant
Horst Wiesinger Consulting GmbH
The Iranian steel industry: Needs to
take the right track for development

Market overview
Leading steelmakers keep operation rate high
despite tough market
Despite tough market conditions caused by economic and political instability
in the county, Iranian leading steelmakers supported by the government
manage to keep their capacity utilization rates relatively high.
Over H1 of the current Iranian year
(March 21, 2015 – September 22, 2015)
total volume of crude steel produced in
the country amounted to 8.2 million t. This
is a 1.8% decrease y-o-y. Nevertheless,
major state-run steel producers maintained
their operation rates high, while private
mills’ utilization rate, despite inching
up compared to the previous year, still
leaves much to be desired. Out of the
above mentioned total volume, such mills
as Mobarakeh Steel Company (MSC)
including its subsidiaries, Khouzestan Steel
Company (KSC), Esfahan Steel Company
(ESCO), Khorasan Steel Complex (KSC
Co), Iran Alloy Steel Company (IASCO) and
Iran National Steel Industrial Group (INSIG)
produced around 7.2 million t of crude
steel, which means other steelmakers’
share did not exceed 1 million t. “Since
major mills belong to the government they
have no other way but to work properly
to support the economy,” one market
source emphasized in conversation with
Metal Expert.
The state support comes in the form of
prioritized investments, loyal funding
policy, subsidized raw materials prices and
export permission despite international
sanctions still being in place. “Local market
has become even worse in the past few
months. That is why state mills are so
active in exports at the moment. This is
their only way to survive crisis,” the source
added. Currently only three Iranian mills are
supplying steel goods to foreign customers.
These are MSC, KSC and ESCO. In the first
half of the year ended September 22 the
country’s total steel export amounted to at
least 1.85 million t, a 46% rise y-o-y, Metal
Expert reported earlier.
„„ Iran:capacity utilization rate of the leading steelmakers
Mill Crude steel capacity,
million tpy
Production in H1**,
million t
Utilization
rate, %
Mobarakeh Steel Company (incl. subsidiaries)* 7.70 3.69 95.7
Khouzestan Steel Company 4.00 1.72 86.1
Esfahan Steel Company 3.00 1.17 78.2
* – Mobarakeh Steel Complex, Hormozgan Steel Complex, Saba Steel Complex.
** – H1 of the current Iranian year (March 21, 2015 – September 22, 2015).

Market overview
Iran likely to meet
export targets
for current year
Despite still being under international
sanctions Iran is progressing in
meeting bold export targets of
4 million t, set for the current Iranian
year (March 21, 2015 – March 20,
2016).
In the first half of the year ended September
22 the country’s total steel export amounted
to at least 1.85 million t, a 46% rise y-o-y.
In the structure of sales the biggest shares
were represented by flat products and
billets, while merchant bars, sections and
slabs were in minority. Major suppliers
remained Mobarakeh Steel Company (MSC)
– 750,000 t, Khouzestan Steel Company
(KSC) with around 700,000 t and Esfahan
Steel Company (ESCO) – 400,000 t.
Increasing exports is one of the ways to
keep Iranian steel industry afloat as local
market is not ready yet to give support to
growing steel output. “We set an objective
around 2 million t of exports this year and
almost 50% of our objectives have been
met. In fact, given the present conditions
and problems facing domestic and export
markets, our performance as far as exports
are concerned have been good,” Bahram
Sobhani, MSC CEO, has pointed out in the
company statement.

Market overview
Tehran strengthens
cooperation with Asia
in mining and steel
sectors
Considering that over the period
of sanctions Asian countries were
Iran’s major customers for crude oil,
economic ties between them became
quite developed despite banking
system difficulties. Now when
international blockade is gradually
falling off South Korea, Japan,
China and India are strengthening
cooperation, in particular in mining
and steel sectors.
Recently Japanese steelmakers Kobe Steel
and the state-run Japan Oil, Gas and Metals
National Corp (JOGMEC) have announced
interest in Iran’s mining projects. During the
meeting with officials in Tehran JOGMEC
Project director Satoshi Asawa indicated
that his company could partner Iranian
firms for financing metals and energy
projects and transfer of technology, given
the opportunity the conclusion of nuclear
talks has created. “Iran is blessed with rich
mines, including iron ore resources. One
of the technologies owned by our holding
is for extracting iron ore from a depth of
1,500 meters, which we can offer to Iranian
companies,” commented Satoshi Asawa to
local media. A lot of attention is now given
to mining and steel projects in free trade
zone of Chabahar on the coast of the Gulf
of Oman, in particular Makran ore to steel
plant with 3 million t capacity.
Chabahar is eyed not only by Japanese,
but also by South Korean investors. Earlier
in July POSCO voiced intention to increase
presence in Iran by implementing their
steel production technology FINEX there.
In FINEX molten iron is produced directly
using iron ore fines and non-coking coal
rather than traditional methods, Metal
Expert reported earlier. “A few steel
companies in Iran already have contacted
us if we can provide steel production
technology such as FINEX,” POSCO’s CEO
Kwon Oh-Joon commented to Reuters.
Another important partner of Iran is India.
Since Iranian steel industry is predominantly
DRI-EAF-based it demands significant
volumes of pellets. However, as local
pelletizing capacities are not sufficient, the
country suffers annual lack of 7‑8 million t
of the product. To partially cover the needs

Market overview
of Iranian market Indian KIOCL will process
both Iranian and Brazilian iron ore into
pellets and ship them to Iran.
The list of Asian partners would not
be complete without China. Within the
framework of governmental plan to
expand Iran’s steelmaking capacities up
to 55 mtpy, Iranian Mines and Mining
Industries Development and Renovation
Organization (IMIDRO) is working on
seven 800,000 tpy DRI-EAF-based steel
projects that are partially invested by
Metallurgical Corporation of China. The
first fruits of cooperation – three DRI-
plants are expected to become operational
by the end of the current Iranian year
(March 19, 2016).
Market insiders consider that Asia’s
interest in Iranian projects is explained not
only by attractiveness of this market but
also by availability of Iran’s accounts in the
banks of these countries. “Asians benefit
much from this situation as it is some kind
of barter and they do not use their money.
They received oil and now exchange it for
technologies and machinery,” Iranian trader
commented to Metal Expert. Earlier it was
also discussed that payment for KIOCL’s
pellets will be effected from Iranian oil
accounts in India.
Crude steel production expected at 18
million t in Iran
As Iran’s economy might start showing the signs of improvement on the back
of gradual sanctions removal steel producers set new production targets for
the current year, that are to bring the industry one step closer to the desired
55 million tpy crude steel output by 2025.
This Iranian year (started March 21, 2015)
country’s crude steel output is projected
to reach 18 million t, according to Iranian
Ministry of Industries, Mines and Trade
(IMIDRO), an 8.5% rise compared to the
previous year. Despite Q1 modest y-o-y
change from 4.29 million t to 4.32 million t,
last month (May 21-June 21) has already
shown an improved result – 1.6% up to
1.41 million t y-o-y.
The major driver for improved production
results will be the planned rise in steel
export volumes from 2.5 million t to
4 million t in the current year. Another
positive factor is the improvement of
economic environment in the country due
to sanctions removal, that would mean
the inflow of investments both in steel
sector and consuming industries, such as
construction.
“The result, of course will not be immediate
but the revival of construction projects
will need extra steel volumes,” one local
producer told Metal Expert.

Market overview
Steel exports to double this year
Supported by production growth and government incentives Iran eyes
doubling steel export this year (ending March 2016).
The country’s current export target is
4 million t of steel. “At present, the Ministry
and Iranian Mines and Mining Industries
Development and Renovation Organization
(IMIDRO) have provided suitable grounds
for the export of steel in order to maintain
Iran’s market share despite intense
international competition,” Mehdi Karbasian
Deputy Ministry of Industry, Mine, and Trade
and Iranian Mines commented to Press
TV. Export plans are spurred by the rise in
steel output (5% in January-May y-o-y) to
6.9 million t, according to WSA.
In the structure of exports 50% will be
represented by flat products, chiefly
Mobarakeh Steel’s and its subsidiaries,
Metal Expert reported earlier. Another
50% will be semi-finished products.
Khouzestan Steel, the major semis
producer, in particular, is targeting
to sell 1,5 million t of billets over the
period, Metal Expert learnt from the mill
representative.
However, if the issue of international
sanctions is solved Iran will have a way
more promising export future. According
to the Islamic Republic’s 2025 Vision Plan,
the country’s total steel production capacity
is to hit 50‑60 million tpy, with an expected
exports figure of 10‑15 million t.
Turkey – Iran free trade zone to boost steel
trade between countries
Since nuclear deal has been struck, Iran is actively working on recovery of
economic ties both on the global scale and inside Middle East region. In
particular, the country is now in cooperation with its strategic partner –
Turkey – for establishing a free trade zone on the border of the eastern Turkish
city of Van and Hoy in northwestern Iran. The creation of such zone may give
an additional spur to steel trade between the countries.
Before the increased pressure of economic
sanctions in 2012 Iran could import up to
700,000 tpy of steel semis and 400,000 tpy
of longs from Turkey. However, as Iranian
steel market structure has changed since
then, it turned from a net importer to an
exporter. There were sales of some billet
volumes from Iran to Turkey in H1 2015,
Metal Expert reported earlier. Moreover,
the info was circulating around the market
about the plans to supply slabs. “At first
glance Iran is seen as a big steel importer,
however, it is likely to become a serious
exporting country also. Even so, with

Market overview
the lifting of embargo, we are planning
to increase our exports to the country,”
Namik Ekinci, the chairman of Turkish Steel
Exporters Association (Celik Ihracatcilari
Birligi, CIB) noted.
Market insiders’ opinion about the effect of
such free zone on steel trade between the
two countries differs. Some believe that Iran
will have more benefits from this. “There
will not be a good way to export products
to Iran as it is quite saturated. The most
probable transactions will be billet exports
to Turkey,” one local producer commented
on the situation. The others say it is too
early for conclusions as Iranian market
may experience a dramatic change in
consumption after sanctions removal.
Turkey’s plan to raise exports to Iran
doubtful, prospects for imports look better
With economic sanctions to be lifted, Turkish steelmakers
have high hopes for tighter cooperation on steel exports
with Iran in the second half of 2015. However, changes
that took place during the time of sanctions put a
question mark over the plan of Turkish suppliers.
Turkey seeks to
increase steel
exports to Iran on
the back of trade
liberalization that
will follow signing
of a nuclear
agreement between Tehran officials and
world powers, Turkish Steel Exporters’
Association (Celik Ihracatcilari Birligi, CIB)
reports. Industry participants expect the first
positive changes to come as soon as late
2015, though opportunities for economic
recovery in Iran will not occur at once and
only slight progress will be made by the end
of the year, reconnection of Iranian banks
to the SWIFT system in particular. “Turkish
steel products will find their place in the
Iranian market once trading restrictions are
cancelled though Iran has increased its own
export potential over the past few years,”
CIB chairman Namik Ekinci claims.
Turkish exporters’ attempts to regain their
share in the Iranian market are unlikely
to turn out successful, considering that
dominating scrap-fed EAF production
reduces competitiveness of Turkish steel.
Besides, Iran has boosted steel product
capacity over the years of sanctions.
Therefore, it is Iranian producers who
will rather gain a foothold in the Turkish
market, square billet and slab segments
first of all, and shift the balance of
power in the market. “There is interest in
Iranian semis in Turkey, trial lots may be
purchased soon,” one of major traders has
told Metal Expert.
Over the time of trade embargo against
Iran Turkish steel exports shrank to this
destination, from 195,000 t in 2013 to
166,000 t in 2014, according to data
provided by CIB. In H1 2015, shipments to
Iran fell to 51,000 t, down 40% y-o-y.

Iranian mining
Iran plans $29 billion investment in
mining and steel industry to balance
production chain
Despite rich iron ore reserves, Iranian mining potential is currently
understudied and underused. However, to feed the country’s bold 2025 steel
capacities expansion plans, Iran is planning to balance production chain.
For this reason Iranian mining and steel industry is seeking for local and
foreign financial support after the removal of international sanctions.
To produce 55 million t of steel, Iran will
require 159 million t of iron ore, Iranian
Mines and Mining Industries Development
and Renovation Organization (IMIDRO)
assesses. Current extracting capacities
stand at 56 million t, while under
construction are just another 60 million t. To
balance production chain Iran also needs
to expand iron ore processing capacities.
If targeted steel capacity is reached, it
will require 88 million t of concentrate,
84 million t of pellets and 7 million t of sinter
as well as 54 million t of DRI and 6 million t
of pig iron, IMIDRO estimates.
Considering existing projects involved
in production balance chain, only iron
ore and concentrate segments remain
underdeveloped, the industry lacking
around 43 and 18 million t, respectively.
However, if adequate investments are made,
with proven reserves assessed as 2.7 billion
t and studied reserves – as at least 4.5
billion t, the country can easily become self-
sufficient in these products.
The major obstacle on the way to
investments inflow now remains
international sanctions. As they are
removed, in total, the country plans

Iranian mining
$29 billion injection in mining sector, with
significant share directed to iron ore mines
development and exploration. At least 50%
of this amount is expected to be attracted
from abroad, as Metal Expert has learnt.
“Current private sector iron ore projects
need $4.4 billion investments, while another
$1.6 billion are expected to be sourced by
the government for exploration in the next
4 years,” Iranian Iron Ore Producers and
Exporters Association (IROPEX) official
Sadjad Ghoroghi said.
„„ Iran:steel chain balance based on2025Vision (milliont)
Product Capacities
needed by 2025
Current
projects
Current
capacities
Balance Production
in 2014*
Iron ore 159 60 56 -43 52.0
Concentrate 88 40 30 -18 24.1
Pellet and sinter 91 64 27 0 20.7
DRI and pig iron 60 34 26 0 15.5
Steel 55 33 22 0 16.1
Source: IMIDRO
* – IROPEX
Yazd Rolling Mill to strengthen positions
in raw materials market
Iran’s vast steel capacities expansion plans – to 55 million tpy – will require
significant amounts of raw materials. Thus, Iran’s Yazd Rolling Mill continues
to work over processing projects to take the share of this promising market.
For this reason in September the company
finalized a deal for the purchase of 400,000
t pelletizing plant in Yazd province, as it was
earlier planned. According to the company
representative, it is ready for operation. The
commissioning will take place in several
weeks. The company’s expansion pro-
gramme includes another pelletizing plant
with the same capacity. Now Yazd Rolling
Mill is waiting for the final lots of machinery
to be delivered in the coming two months
and then will start its installation, which is ex-
pected to be finished by the end of H1 2016.
Concentrate for the first pelletizing plant will
be delivered from the company’s 500,000 t
beneficiation plant. The second pelletizing
line, when installed, will be first fed with
concentrate from the local market.
Nevertheless, Yazd Rolling Mill
administration does not exclude possibility
to install 1.65 million tpy beneficiation
plant in Kerman province and partially
supply pelletizing plants located in Yazd
in the future. However, at the moment
this project together with 1.2 million tpy
pelletizing plant (Kerman) remain on hold.
“We are now mainly working on investment
programmes and current assets located
in Yazd,” the company representative told
Metal Expert.

Iranian mining
MIDHCO expands despite tough
economic conditions
Despite difficult financial environment
in Iran, Middle East Mines and Mineral
Industries Development Holding
Company (MIDHCO) continues to work
over expansion projects according to
the schedule.
This year the producer has commissioned
two concentrate plants at Sirjan Iron and
Steel Company (SISCO) and Zarand Iron
and Steel Company (ZISCO), 2 million tpy
each, which increased its nominal capacity
up to 8 million tpy. According to the
company’s latest report it targets to produce
5.1 million t of concentrate in 2016.
By the end 2015 – early 2016 the producer
will also commission two pelletizing plants
at SISCO and ZISCO, 2.5 million tpy each
as well as 1 million tpy steelmaking plant
Bardsir at SISCO, Metal Expert has learnt
from the company representative. Thus,
production at SISCO will be integrated,
while ZISCO will be able to supply raw
materials to the free market. However as in
2016‑2017 the producer is planning to install
1.7 million tpy BOF-based steelmaking plant
at ZISCO, raw materials will later be used
for own production.
The expansion program also includes
Butia Iron and Steel Company (BISCO)
with 2.5 million tpy pelletizing plant (to be
commissioned in 2016‑2017), 2 million tpy
DRI-module and 1.5 million tpy steelmaking
plant that are expected to come on stream
in 2017‑2018.
When the projects are realized, MIDHCO
will be capable of producing 7.5 million tpy
of pellets, 3 million tpy of DRI and
4.2 million tpy of steel. Situated in Kerman
province, which has a beneficial location
in the south of the country, MIDHCO
mills will serve not only domestic but also
foreign customers. “The company not only
puts no financial burden on governmental
budget but also decreases portion of basic
metals import to provide foreign exchange
savings for the country and creates potential
in exports of raw material,” a MIDHCO
representative commented to the local press.

Iranian mining
Iran may stop iron ore exports starting
from March 2016
Considering the aggravated situation in the global iron ore market as well as
bold steel production expansion plans, Iran may stop iron ore exports already
starting the new year (March 2016).
For the last several years Iran used to
export over 20 million t of iron ore annually.
The major customer was China. However,
as demand-supply balance in the global
market was destabilized in 2014 and prices
started to plunge, Iranian iron ore producers
had to limit export volumes. This led to the
decrease in production and even caused
closure of some small mines. “Almost the
total production of private iron ore mines
will shut down if iron ore keeps below $45/t
or $50/t level,” said Keyvan Jafari Tehrani
representative of Iranian Iron Ore Producers
and Exporters Association (IROPEX).
In these conditions Iran is planning to
stop iron ore exports and to use them in
enhancement of local steel production.
“Implementation of the projects to produce
concentrates and pellets in the country
has been intensified. Starting from March
2016 we will have no more iron ore for
export,” Mehdi Karbasiyan, deputy minister
of Iranian Mines and Mining Industries
Development and Renovation Organization
(IMIDRO) told ISNA. According to Metal
Expert’s data in 2015‑2016 around
20 million t of pelletizing capacities will be
commissioned in Iran.
By 2025 Iran is planning to produce around
50‑55 million t of crude steel, Metal Expert
reported earlier. This, according to IMIDRO
report, will require around 57 million t of
DRI, 86 million t of pellets and 86 million t of
concentrate. To fulfil this plan Iran will need
around 138 million t of iron ore. Considering
these figures Iran will have to not only stop
iron ore exports, but also expand current
capacities now amounting to around
56 million t.
According to Iran’s Custom Organization,
during the first quarter of the current year
(March 21, 2015 – July 21, 2015) Iran
exported 3.419 million t of iron ore, which
is 22% less than in the same period of the
previous year. Some market insiders believe
that this decline caused the increase in iron
ore prices in China in May-June, however
further decline in volumes will have no
effect on prices. “Iranians and other non-
mainstream miners have been cutting
export volumes for a while already. I believe
the decision to halt shipments will not have
any impact on the global price curve, as
Australians are still working on capacity
expansion projects. They will offset any
declines made by others,” one Chinese
trader commented to Metal Expert.

Iranian mining
India’s KIOCL to partially cover Iran’s
pellet need
Indian state company Kurdemukh Iron Ore Company Limited (KIOCL) is in
negotiations with Iran to supply pellets, as the latter does not have ample
capacities to cover own needs in high quality raw materials.
Since nuclear deal was finally struck, Iran’s
steel industry is supposed to start growing
in the near future. However, lacking high
quality iron ore, the country will need extra
volumes of pellets to feed steelmaking
facilities. “The production of pellets in
Iran is not sufficient yet. There is a need
to import 7‑8 million tpy,” Keyvan Jafari
Tehrani, Head of International Affairs at the
Iranian Iron Ore Producers and Exporters
Association commented to Reutes. Last
Iranian year (ended March 2015) Iran
produced 21 million t of iron ore pellets,
while demand reached a bit less than
30 million t, Metal Expert reported earlier.
For this reason, Iran is planning to sign
pellet supply deal with India’s KIOCL
for around 2 million tpy of the product.
KIOCL will initially buy 80,000 t of high-
grade concentrate containing 67% Fe
from Anglo American’s Brazil operations
by September, convert it into pellets and
then sell to Iran for about INR 500 million
($7.8 million), according to the company’s
chairman Malay Chatterjee. Also, under the
terms of the deal Iran is going to bring in
1 million t of low-quality iron ore to India to
process it at KIOCL’s coastal facilities and
then export back to Iran.
Another suppliers, such as Oman, that
traditionally exports pellets to Iran, and
Kazakhstan, waiting for the economic
sanctions to be removed, are both eyeing
the possibility to enjoy increased demand
at this destination in the near future.
However, in a longer prospect Iran plans to
become self-sufficient and develop its own
pellet-making facilities that are expected
to skyrocket to around 50 million tpy in the
next three years, Metal Expert reported
earlier.

Iranian mining
Neyriz Ghadir Steel Company to supply local
market with DRI by end‑2016
Neyriz Ghadir Steel Company (NGHSCO, Iran) is to add to country’s DRI output
and to cover partially growing needs of local producers within the framework
of governmental programme intended to increase steelmaking capacity to
55 million tpy by 2025.
NGHSCO continues to work on
800,000 tpy DRI module. The facility
is expected to succeed thanks to
its beneficial location in the south
of Iran (Fars province), where most
of the new steelmaking projects are
concentrated.
With DRI-module installation being
75% complete, NGHSCO plans to
start production already in H2 2016,
Metal Expert has learnt from the
company’s representative.
NGHSCO was also eyeing the installation
of an 800,000 tpy steel melt shop
for billets production, however, the
construction works have been put on hold
until financial and market situation in Iran
improves. No dates are commented now.
Initially, the venture was wholly-owned
by the national holding IMIDRO,
which attracted the private Iranian
investor Ghadir Industries and Mines
International Company, currently holding
65% equity.

Metal Expert
Iran in Focus
May 2016
potential yet to be unleashed
Mobarakeh Steel:
exports the only way out
of recession in Iran
Interview:
Metal ExpertSquare Billet in FocusApril 2016
Nuclear deal to breathe new lifeinto Iran’s steel export
Khouzestan Steel’s billet exportpotential yet to be unleashed
Mobarakeh Steel:
exports the only way outof recession in Iran
Interview:
EAF producers should becomemore aware of DRI use
Metal ExpertEurope in FocusMarch 2016
potential yet to be unleashedMobarakeh Steel:exports the only way outof recession in Iran
Interview:
Metal Expert
December 2015
Iran’s export potential
in longs and semis yet to be
unleashed
Mobarakeh Steel:
increasing exports is the only
way out of recession in Iran
IGISCO:
Metal ExpertSquare Billet in FocusAugust 2015
Billet imports
to replace foreign scrap in Turkey
Al Jazeera Steel:
“No point in own steel making”
Iron ore surplus not to risein 2015
Main Topics
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