Page 7 - Financial Tribune No 638

LATEST NEWS Stone Export Unprocessed decorative stone exports will be slapped with a 5-15% tariff as of the end to the sale of unprocessed minerals, IRNA reported. Although the measure was Tehran Stock Exchange
Tariff on the Way next Iranian year (starting March 20, 2017), a deputy minister of industries, mining eventually revoked, experts believe the sector has yet to regain the markets it lost.
and trade announced on Sunday. Jafar Sarqeyni added that the duty will remain According to the Ministry of Industries, Mining and Trade, Iran holds about 5 billion tons
in effect for two years. Decorative stone exports were banned in 2006 to put an of ornamental stone reserves and produces close to 14 million tons per year.

Index Value Changes
Unit %
7
TEDPIX 80,063.7 4.90 +0.01
DECEMBER 5, 2016
Price 28,250.3 1.70 +0.01

First Market 56,744.7 105.10 +0.19

IRANIAN ECONOMIC DAILY www.financialtribune.com/economy Second Market 170,897.9 569.10 -0.33

Industry Index 67,389.3 39.30 +0.06

Free Float Index 88,721.90 5.59 -0.01

Steel Potential, Challenges in Iran TSE 30 3,265.1 5.00 +0.15

TSE 50 3,148.8 2.90 +0.09

There is a mismatch between Iran’s steelmaking Excess Demand
capacity and steel demand at present.
A number of obstacles must be overcome for its Symbol Volume Last Value (IRR)
steel industry to reach its true potential, reads an
article published in Metal Bulletin magazine’s latest edition. The PIAZ1 5,075,279 3,361 17,058,012,719
full text follows:
DDPK1 1,534,374 6,990 10,725,274,260
The international community’s interest in Iran, particularly its
steel sector, has increased significantly since sanctions were ABDI1 428,971 16,511 7,082,740,181
partially removed at the beginning of this year. Many foreign
steel producers, traders and equipment suppliers have rushed Excess Supply
back to Iran to renew ties, seeing great business potential in
this market. Symbol Volume Last Value (IRR)

Nevertheless, as much as it is promising, the Iranian market OFRX1 5,000,000 945 4,725,000,000
still remains challenging.
SBHN1 172,286 17,767 3,061,005,362
On the one hand, with the liberalization of trade relations
and the inflow of investments into different sectors of the TAZB1 501,363 6,084 3,050,292,492
country’s economy, it is expected to see significant growth in
steel consumption. *TEDPIX: Tehran Stock Exchange Main Index
* FFI: Free Floating Index
Investments in steel production itself will spur the country’s * FIN: Industry Index
export potential.
Source: www.tse.ir & www.ifb.ir
Iran holds abundant raw materials and energy resources to
feed its growing steelmaking industry. Exchange Traded Funds

On the other, the recovery of the economy is still hampered Iran’s steelmaking capacity utilization rate is little over 60%. Symbol Volume Value Last Price Change%
by lingering banking issues, which means steel-consuming and (Million Rial) (Rial)
steelmaking project realization may take longer than expected.
their direct-reduced iron plants commissioned, while the are not found. SERVATM 525 6.82m 12,998 +0.51
Besides, the industry suffers from water and electricity supply steelmaking plants will not come on stream until 2017-18 at “We plan to strengthen our positions in the export market
problems as well as inland and external transportation problems. the earliest. ACORD 58,501 669.91m 11,451 +0.38
through competitive prices, high quality, timely delivery
Export markets are not so welcoming now, in view of the Depending on the pace of the country’s economic as well as new destinations,” the country’s largest semi- SAYAND 300 4.09m 13,647 +0.24
number of antidumping investigations and protective duties development, the output is expected to reach 35-40 million tons finished steel producer Khouzestan Steel Company’s
being applied internationally. per year. deputy managing director for sales and marketing, Bahman ETEMAD 770 10.66m 13,842 +0.07
Tajallizadeh, said.
Domestic Market Transformed Are Exports Viable? ATLAS 3.17m 37.55b 11,860 +0.05
The structure of the Iranian steel market has changed Considering the availability of the nation’s natural resources Thus, KSC has become more active in slab sales this
over the years of sanctions. Following the implementation of a and growing steelmaking capacities, as well as the currently year, sending trial lots to Brazil and increasing sales volumes NASIM 5,147 54.22m 10,534 -1.05
number of steel projects and decreased consumption, Iran is weak domestic consumption, Iran’s potential for steel exports to Southeast Asia. Over the first eight months of 2016, the
losing its status of net-importer. is quite high. producer exported 1.09 million tons of semi-finished products. ALMAS 12 157,560 13,130 -2.38
Iran used to purchase around 3 million tons per year of In the last Iranian year, the country’s total steel exports
billet (in 2012, for example), with Russia and Kazakhstan being stood at 3.8 million tons. Around 50% of this volume were Esfahan Steel Company, Iran’s largest producer of TSE Index Ends Flat,
the largest suppliers. In 2014, however, this figure plunged to made up by flat-rolled products, mainly HRC, while up to 40% construction steel, with a market share of 19%, mainly exports its IFX Up 0.96%
around 250,000 tons, while in 2015-16, billet imports shrank constituted semi-finished products, predominantly billet. bar and beam products to neighboring countries. But it is now also
further to just occasional deals. Major export destinations for Iranian flat products were looking for new destinations for its semi-finished material. Tehran Stock Exchange’s main index gained 4.90 points or
Now, with the expansion of production facilities, the country European countries such as Italy, Spain and Germany, as well
faces the need to find markets for its steel. as the UAE in the Middle East. In the billet segment, the UAE, “We are looking to sell billet to European customers,” ESCO 0.01% to end Sunday trade at 80,063.7.
Iran’s steelmaking capacity stands at around 28 million tons, Oman and Jordan were the main trading hub. sales and marketing deputy, Ehsan Dashtiyaneh, told Metal
according to Mobarakeh Steel Company’s Managing Director Until this year, Saudi Arabia was also one of the most Bulletin earlier in October. More than 711 million shares valued at $49.1 million changed
Bahram Sobhani. promising destinations for Iranian billet, but after relations
Over the first nine months of 2016, Iran’s steel production deteriorated in January, the countries broke diplomatic ties, As for flat steel export barriers in Europe, market insiders hands for the day.
reached 13.21 million tons, up 8% year-on-year, according to which meant Iran stopped exports to this destination. believe Iran may offer new products, rather than change
the World Steel Association. There is also an obstacle to hot-rolled coil exports from the destinations. Iranian Parenteral and Pharmaceutical Company was the
Despite these positive dynamics, this figure means that the European side in the form of an anti-dumping investigation,
steelmaking capacity utilization rate is little over 60%. One of where Iran has been targeted together with Brazil, Russia, “If an anti-dumping duty is imposed, Mobarakeh Steel biggest riser, going up 5% to 12,140 rials per share.
the reasons for that is a stagnation of consumption in major Ukraine and Serbia. Company (Iran’s largest flat steel producer) may replace HRC
steel-intensive sectors. The European Commission may impose provisional anti- exports to Europe by slab and coated steel,” a market source said. Sina Chemical Industries Company incurred the biggest
In the last Iranian year (March 2015-16), the country’s steel dumping measures on HR coil from the five countries within
consumption was assessed at 15-16 million tons, according to nine months of the start of the investigation–that is by April 7, Recently, however, the producer has increased focus on loss among all TSE-listed companies, as it went down 4.86% to
estimates by market participants. This is down around 1-1.5 2017. the domestic market, as “there has been a rise in domestic
million tons year-on-year. In 2015, Iran’s HR coil exports to Europe were a little over demand from new water projects and recent investments in the 11,550 rials per share.
“The problem is in the lack of investments in steel- 1 million tons, while in January-August 2016 they reached oil industry”, according to the company source.
consuming sectors,” a producer said. 781,000 tons, according to Eurofer. Ghadir Investment
The World Bank expects GDP growth of around 4% for Iran For the current Iranian year (ending March 20, 2017), the Imports to Shrink
this year. country has an export target of around 6 million tons of steel Despite MSC’s attention being concentrated on the Company gave the biggest
“The hike of activity in the oil and gas sector will contribute products. However, it will be hard to reach, if new sales outlets domestic market, there is still insufficient local supply of thin
2.6% of this growth. The balance will come from the services hot-rolled coil (2 mm thickness and below), for which there is boost to the benchmark,
sector. Steel-intensive sectors such as construction and Considering the great demand in Iran among pipe and profile producers.
infrastructure are not expected to show sizable growth until availability of the In 2015, Iran imported around 3.3 million tons of flat steel followed by Mobarakeh
2017,” the same producer said. nation’s natural products. Out of the total volume, 70% were hot-rolled coil and
Nevertheless, this is not the only challenge for Iranian resources and growing the rest cold-rolled coil and hot-dip galvanized. These products Steel Company and
steelmakers. The government plans to increase annual steel steelmaking capacities, were imported despite a 15% import duty.
output to 55 million tons by 2025, with the largest portion of as well as currently weak This Iranian year, import duties have been raised to 20% Golgohar Mining and
steelmaking projects to be commissioned in the next three years. domestic consumption, for HR coil and CR coil, and to 26% for HDG. Duty increases
Iran’s potential for steel caused a lot of concerns among local consumers who appealed Industrial Company.
A number of MoUs have been signed this year with exports is high to the government to reduce them. The duties, however,
international equipment suppliers to buy machinery for these remained unchanged. Bandar Abbas Oil
projects. But if they are all implemented, they could lead Instead, one of MSC’s mills–Saba Steel Complex, which is
to overcapacity and cause price erosion for domestic steel able to produce 700,000 tons per year of HR coil–was largely Refining Company weighed
products, potentially exacerbating the already challenging steel dedicated to the production of thin HR coil, the company said
markets. in August. the most on TEDPIX,
The move seems to have had its effect as over the first nine
Some market participants have cast doubt on whether all of months of 2016, Iran imported about 1.7 million tons of flat steel followed by Tehran Oil
the announced investment programs will be realized on time, or products, a market source estimates.
if, in fact, all of them will go ahead. “MSC continues to grow, I will not be surprised if next year, Refining Company and
the import figure will be even smaller,” a market participant
For example, the state-supported “eight provincial projects”, said, indicating the planned expansion of Saba Steel Complex Islamic Republic of Iran
which have a total steelmaking capacity of more than 6 million steelmaking and rolling capacity in 2017 to 1.6 million tons.
tons, date back to 2006. Shipping Lines.

However, by the end of 2016, they will have just The Price Index was

up 1.70 points or 0.01% to Over 711 million shares worth
stand at 28,250.3.
The First Market Index $49.1 million were traded at TSE.

gained 105.10 points or

0.19% to post 56,744.7.

The Second Market Index shed 569.10 points or 0.33% to

reach 170,897.9.

The Industry Index won 39.30 points or 0.06% to register

67,389.3.

The Free Float Index gave up 5.59 points or 0.01% to hit

88,721.90.

The TSE 30 Index added 5 points or 0.15% to settle at 3,265.1

while the TSE 50 Index won 2.90 points or 0.09% to finish at

3,148.8.

Slovenian Firms Strike Deals Worth €10m in Iran IFX Adds 7.94 Points
Iran Fara Bourse’s main index IFX gained 7.94 points or
Several Slovenian companies, including Iranian market for decades, struck a deal has a free-trade zone status, and later expand Slovenia reopened its embassy in 0.96% to end Sunday trade at 838.46.
air domes manufacturer Duol and Iskratel worth €5 million with Iranian switchgear maker in other Iranian regions. Iran late November in the presence of Some 1.05 billion securities valued at $65.4 million were
Telco, have signed deals worth €10 million Electro Kavir for the supply of measuring and Slovenian President Borut Pahor and traded at the over-the-counter exchange for the day.
with Iranian partners at the Slovenian- pressing equipment. Hydro turbines maker Litostroj Power Iran’s Foreign Minister Mohammad Javad Rail Pardaz Seir Company saw the highest number of traded
Iranian Business Conference in Tehran on signed a €4 million annex to the contract Zarif. shares, as more than 22.6 million of its shares changed hands.
Friday. Iskratel has also signed a deal with the for the project of Khoda Afarin Power Plant Kimiya Zanjan Gostaran Company registered the highest
company Iran Tablo for the supply of protective on the Iranian-Azerbaijani border, which Heading a 50-strong commercial delegation, value with the trading of $1.1 million worth of its shares.
Duol signed a deal worth €1 million to relays and systemic solutions. is being built by Iranian industrial giant Slovenian President Borut Pahor arrived in Baghmisheh Urban Development and Housing Company,
construct an air dome at the Imam Khomeini Farab. Tehran November 22 and was officially greeted Ravan Fanavar Engineering Company and Kimiya Zanjan
International Airport in Tehran. Margento, a Slovenian company researching by Iranian President Hassan Rouhani. Gostaran Company had the highest value increase.
mobile transaction services, signed a deal Litostroj Power is to make two butterfly Day Insurance, Tuka Refractories Company and Iranian
“The dome is to serve as a temporary with the Iranian company City Development & valves for the hydropower plant. In the presence of the two presidents, Investment Incorporation had the highest decline.
airport terminal and will be used during the Innovations to establish a cashless payment three memoranda of understanding were Marun Petrochemical Company, Zagros Petrochemical
renovation of the airport,” said Duol CEO system with the use of mobile phones. All companies have welcomed Slovenia’s signed to expand economic interactions Company and Arfa Steel Company had the most positive impact
Dusan Olaj, The Slovenia Times reported on decision to reopen the Slovenian Embassy and increase cooperation in the fields of on the IFB benchmark.
Saturday. It will first introduce the system on Kish in Tehran, as this will be of great significance information and communications technology
Island, which is located in the Persian Gulf for making new deals, especially with national and nanotechnology.
Iskratel, which has been present on the about 20 kilometers from mainland Iran and institutions, in Iran.