“Ease in imports will create a competitive environment”
Commercial Manager of Bahman Steel:

“Ease in imports will create a competitive environment”

“When importing was easier than it currently is, there was competition among sheet producers; they tried to ramp up production and enhance quality. But when imports declined, the competitive environment disappeared and quality deteriorated,” said Jamal Fahimi, commercial manager at Bahman Steel.

“Bahman Steel has been in the steel industry for almost 50 years,” said Jamal Fahimi in an interview with FelezatOnline. “The company first offered sheet services, such as forming and cutting, but it has been producing pre-painted sheets from galvanized coils for five years. With proper management, all efforts have been towards the development of the company and meeting customer demand for pre-painted sheets; many of our customers agree that we have been so far successful.”

“The company’s nameplate capacity is 120 thousand tonnes per year, but due to economic problems resulting from the sanctions as well as issues with raw material availability, we are operating with one working shift only and our monthly output is about 4,000 tonnes of pre-painted galvanized sheets, while the actual capacity is 10,000 per month.

“Bahman Steel is currently producing 0.4-0.7mm pre-painted sheets, but the production line is capable of producing a range of thicknesses from 0.2 mm to 1.0 mm. Due to the limitation of raw materials, especially for sheets thinner than 0.4 mm, part of the production line has been idled.”

Adding production lines and creating diversity

Fahimi pointed out that there have been obstacles to the company’s progress. “The sanctions have obviously been one of our major challenges, but the company has not retreated from its decisions to move forward. Bahman Steel added a paint production line called Saramad Rang Shomal, which started operations a few months ago.”

“Saramad Rang Shomal will produce paints for coil coating, used to paint galvanized sheets and aluminum coils. The factory is among top producers of traffic marking paints, wood paints, and wood patterns in Iran and the Middle East.

“Bahman Steel is mainly focused on the production of sheets for the construction industry, but we have been able to expand the range of our products over the past two years by producing pre-painted sheets for home appliances as well; we had great feedback from consumers and we produced high-quality products.”

Fahimi went on to talk about the company’s development plans: “We are also looking forward to the production of whiteboard paint, which is currently among imported products; this will help reduce imports and cut forex expenditure. The production of galvanized sheets is also one of Bahman Steel’s major plans. The factory is being built and the contracts for buying machinery have been inked; hopefully, the project will soon be commissioned.”

The eternal shortfall of raw materials

Fahimi pointed out that Bahman Steel uses galvanized coils to produce pre-painted sheets: “With the current state of sanctions, we have no choice but to procure raw materials from domestic producers. Chaharmahal & Bakhtiari Automotive Sheet Co. (CBASCO), a subsidiary of Mobarakeh, is our major supplier. Bahman Steel buys 4,000 tonnes of galvanized sheets from CBASCO, which accounts for 60% of our demand.”

The commercial manager said that Bahman Steel is facing challenges regarding raw materials: “Prior to the sanctions, it wasn’t particularly difficult to import raw materials. However, after the sanctions were imposed, it became increasingly challenging to import some raw materials. This is beneficial for domestically produced goods, but it will remove competitiveness for domestic companies. In other words, when these companies find themselves without rivals in supplying raw materials to downstream businesses, their motivation to boost the quality of their products will subside.”

According to Fahimi, cumbersome regulations are another issue in the steel industry: “Rather than restricting dealers, these regulations are hurting producers. For instance, products reach foreign customers four months after their order date, and a lot changes in import regulations in four months. Thus, companies are always dealing with uncertainty about imports and can’t make plans accordingly.”

How imports affect quality

“Bahman Steel is one of the companies affected by changes in import regulations. We placed an order for some products in February 2018, which were delivered four months later. The government and the bank required us to pay the currency rate differential. When a company plans for imports, it shouldn’t be disrupted by instant changes in regulations and directives. Changes in regulations put producers under a lot of pressure and rob them of motivation for production.”

Fahimi said that Bahman Steel is located in a remote area in Mazandaran and has created 200 jobs: “Rather than focusing on production ramp-up and development projects, producers have to spend a lot of time dealing with problems created by changes in regulations. Despite many meetings held between company managers and officials from the Ministry of Industry, Mine, and Trade, the problem with currency rate differential has not yet been resolved.”

“Due to the sanctions and import regulations, we have to obtain raw materials from domestic sources. There is practically no competition and the prices on the IME are mostly not competitive. Producers have no choice but to buy from the IME, because there are no other major suppliers in the country. If a producer doesn’t buy from the IME, he will have to stop production altogether. Companies have to accept prices on the IME.

“Imports gave producers choice from 20-30 leading international companies. Producers could inquire prices and sales conditions from major companies and at the same time negotiate with domestic companies. Differences in prices and fluctuations were considered. As imports were banned, the competitive environment was destroyed. For an industry to grow, a competitive environment is essential. A company grows when it is in competition with others; when a company realizes that its market share can be lost to other companies, it has to enhance its production quality and sales conditions if it is to survive.”

Fahimi pointed out that Bahman Steel sometimes has to import parts and components for its production lines: “There are a lot of problems regarding imports, but we have to buy low-quality products sold as high-quality goods by domestic producers. This is all due to an absence of a competitive market with restricted imports.”

We have lost export markets

“Our products used to be exported to Afghanistan, Turkmenistan, Iraq, and Tajikistan; however, exports were sometimes disrupted, mainly due to civil wars in these countries, especially in Iraq. Yet we managed to export a cargo of 1,000 tonnes to Iraq, but the government announced a directive that required foreign currency to be returned. This is while exporters could have received rials from Iraq and Afghanistan, according to some directives. Companies exporting to these countries will naturally not have any foreign currency to deliver to the NIMA system.”

According to Fahimi, constant changes in customs and exports regulations will lead to lower exports: “Such regulations and directives should be issued after a think tank has conducted a comprehensive study of their effects and results. Moreover, they should ask producers, especially those in the private sector, what they think of such regulations. It’s only natural that some of these regulations and rules will have to undergo basic changes.

“The country has spent a lot of money and lives on the security of neighboring countries, especially Iraq, but has Iran been able to have exports to those countries proportionately? The government should back exports to neighboring countries, because when exports are improved, the government will without a doubt benefit from them.”

Customer orientation is our top principle

Fahimi claimed that Bahman Steel is confident enough about its products to print its logo two meters apart on its sheet coils: “If a customer is not happy with a product and wants to return it, they have a right to know the producer; both domestic and foreign customers should always be able to track the producer. But most pre-painted coils do not have company logos or names.

“You can never have 100% customer satisfaction, and no company in the world can make such a claim. But Bahman Steel has achieved 95% customer satisfaction with its products. This is our top priority, and we have been successful thanks to the management and the collaboration of our customers, who have shared with us their feedback to improve our products.”

In conclusion, Fahimi said that transparency is another important principle in Bahman Steel: “Customers can visit our production lines whenever they want to see how our products are made and prepared. With the smallest order from Bahman Steel, customers can make sure about our products by visiting our production lines. Other major companies, however, have complicated bureaucratic processes to allow customers visit their production lines; for certain reasons, they have strict regulations for allowing non-qualified people in their production lines.”

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