گزارش تحلیلی بیزینس مانیتور-صنعت فلزات درایران-سه ماهه چهارم2010

The production targets set by the Iranian government look increasingly unrealistic amid economic uncertainty
and a punitive sanctions regime that will badly hit trade and investment in the steel and aluminium industries,
according to this latest Iran Metals Report from BMI.

In the first seven months of 2010, Iranian steel output grew just 2.2% y-o-y to 6.8mn tonnes, while its regional peers Saudi Arabia and Qatar reported a surge in output of 18.9% and 62.6% over the same period. Even taking an optimistic approach and bearing in mind the seasonal summer dip in output, the figures are still
disappointing given the amount of new capacity that has come online over the past 12-18 months. The targets of 14mn tonnes of crude steel output and 20mn tonnes per annum (tpa) of capacity in the current Iranian year,ending 20 March 2011, look out of reach. Even in the absence of new sanctions, the financing, expertise and infrastructure would not be sufficient to achieve the aspirations of the steel industry, with some projects set to see lengthy delays.

Low rates of growth do not bode well for new capacity due to come onstream in the months and years ahead with the prospect of low capacity utilisation and high levels of inventories. According to IMIDRO, the National Iranian Steel Company is planning to open eight new steel works in 2011-13 with combined capacity of 8mn tpa and the government has targeted steel production of 20mn tonnes by 2014. BMI does not believe that, under current the fourth round of UN sanctions approved in June – coupled with yet more from the US Congress – the industry will be capable of reaching that target, which would require a near doubling of output over 2009 levels. Tougher sanctions mean trade finance is even harder to obtain when dealing with Iran, forcing the country to seek more difficult and innovative ways to bypass the sanctions or demand cash up-front. As trade comes to a halt, Iran will have less money to fund growth in its metals industry. Moreover, given that a significant amount of new metals output was to be exported, the sanctions will cut into output growth and limit production activity, with BMI revising down 2014 exports of semi-finished and finished steel products from 3.65mn tonnes to 1.55mn tonnes, representing just over 10% of domestic output.

In light of the economic sanctions, our GDP projection for Iran has been revised down. We therefore forecast
real GDP growth for 2010/2011 to be 1.2%, rising marginally to 1.6% the following year. Further stifling
growth is the government's misdirected public sector spending, prolonging unemployment and therefore low
consumer spending. Consequently, poorer than expected export growth will not be offset by domestic demand, with apparent finished steel consumption up just 0.4% to 16.61mn tonnes. As a result, we have revised down our crude growth forecast from 9.5% to 0.2% and hot-rolled output growth from 10.0% to 0.2%. However, growth in domestic capacities should limit growth in imports, which we forecast declining 0.8%, totalling 8.22mn tonnes in 2010 and not exceeding much above 9mn tonnes over the following four years, with an increasing proportion of Iranian production dedicated to the domestic needs despite the original intention of boosting exports. However, by the end of the forecast period, crude output should have risen by over 3mn tonnes over 2009 levels and hot-rolled output will have grown by around 2.5mn tonnes.