China’s return to the steel export market as its coronavirus crisis starts to come to an end poses a challenge for Iranian steel exports, said Iran-based steel and mining industries analyst Keyvan Jafari Tehrani this week.<\/p>\n\n\n\n
“Chinese exporters are getting back to the market with some quite competitive prices,” Jafari Tehrani told S&P Global Platts in an interview.<\/p>\n\n\n\n
“Iranian billet from KSC (Khouzestan Steel Company) was exported for $390 – $395 per metric ton (FOB) in February. However, in the latest tender, they could not get any higher than $350\/mt which I believe is still a good price for such a market as we are experiencing now,” Jafari Tehrani said. “There is, however, still the possibility that due to lower demand in the target markets, the price of the Iranian steel may decrease to $320 FOB in future,” he said.<\/p>\n\n\n\n
“Following the latest round of US sanctions, Iran has more chance to export to the Far East and the South Eastern countries \u2013 besides, we are exporting to the Middle Eastern countries, and unfortunately both regions are affected by coronavirus \u2013 which will certainly decrease steel consumption radically and now China is going to get more share in these markets \u2013 especially the Asian markets, which is not good news for Iranian steelmakers,” Jafari Tehrani said.<\/p>\n\n\n\n
As Iran’s neighbors including Oman, Qatar, Saudi Arabia, Bahrain and UAE are affected by coronavirus, regional production and consumption of steel has fallen. According to Jafar Tehrani, some Gulf Cooperation Council (GCC) countries have started to review capital expenditure levels of new projects, which is expected to reduce investment levels. Regional project cancellations or postponements will also impact Iranian steel export, as the GCC is the second most important target market for Iran, the analyst said.<\/p>\n\n\n\n
In the raw materials segment, most Iranian iron ore is being produced by state companies which have been able to control and manage the coronavirus spread much better than private miners due to their stronger financial position, Jafari Tehrani said. “It is not easy for the smaller and medium private miners to control the coronavirus backlash so maybe they prefer to reduce their production,” he said. Iran’s imposition last September of a 25% export duty on iron ore and concentrated iron ore may be a further disincentive to iron ore production in Iran, he said.<\/p>\n\n\n\n