“The market of aluminum wirerod is weak due to a lack of liquidity”
CEO of Kashan Wire Net Co.:

“The market of aluminum wirerod is weak due to a lack of liquidity”

“About 120-130 thousand tonnes of aluminum wirerod is produced in Iran, almost all of which is consumed domestically with only a small part being exported by some companies,” said MohammadMahdi Farzaneh. This sums up the market of aluminum wirerod in Iran. “Iranian companies operating transmission line projects in neighboring countries export some of the wirerod produced in Iran. Most of these contractors first import temporarily and then export.”

Commenting on the development of production capacities for aluminum wirerod, Farzaneh said: “Capacities have grown over the past few years; until 15 years ago, there were only two producers of aluminum wirerod, but new factories have been established. Total domestic production exceeds consumption.”

Some producers are operating below capacity.

Emphasizing that production of aluminum wirerod exceeds demand and consumption, he added: “As a result, some producers are operating below capacity.”

Farzaneh believes the consumption and production of aluminum wirerod will grow as aluminum replaces copper owing to its lighter weight and lower prices.

Citing other reasons for the growth of the aluminum market in Iran, Farzaneh added: “The power transmission lines (which use aluminum wirerod) need to be expanded and developed.

“Despite all this, there are problems that hinder the development of the industry. Producers and the market in general are dealing with challenges beyond their control, such as price fluctuations as a result of changes in the dollar exchange rate.”

Added value for aluminum wirerod is about 15%.

“The small added value comes short of offsetting fluctuations in the price of wirerod in credit payments. Thus, transactions must be in cash, but liquidity is a big problem for both producers and consumers of aluminum wirerod.

“We used to be able to make credit transactions with our customers, but as prices are fluctuating, we can’t give customers a definite price.”

Due to a lack of liquidity, demand is not real.

“If, for instance, we have a two-month transaction period, we cannot buy the same amount of unwrought aluminum when we receive the money from the customer. There is demand in the market, but without liquidity, the demand is not real.”

The market was better last year.

“It wasn’t like this last year; prices were more stable. Producers could make long-term credit transactions. The main problem is fluctuations of aluminum price in the IME.”

Raw material availability is not much of an issue.

“There were supply shortfalls of raw materials. But now we can get raw materials on the IME without much problem; supply might grow and prices might stabilize.” He also reminded, “The price of aluminum is determined by the exchange rate.”

Decline in exports has put pressure on the market.

“Export has declined due to problems of money transfer, putting further pressure on the market.” Farzaneh explained that the dollar rate is now an advantage for exporters, but with problems with the banking system such as LC, export has declined.”

Pointing out that the production of wires and cables constitutes the largest consumption of aluminum wirerod in Iran, Farzaneh said, “Domestic capacity currently exceeds consumption; with easier exports, the market would have been in better shape.”

He also referred to the depreciation of the rial: “With a solution to the money transfer issue, we can have great exports.” To clarify, he added: “About 300 thousand tonnes of unwrought aluminum is produced in Iran, almost all of which is consumed domestically; however, an additional 200 thousand tonnes used to be imported. Approximately the amount of wires and cables would be exported.”

We can export 300 thousand tonnes of aluminum wires and cables.

“If we get rid of the problems with exports, we might be able to export about 200-300 thousand tonnes of aluminum wires and cables.”

Farzaneh also talked about the applications of aluminum wirerod: “It is currently used mostly in the wires and cables industry. We also produce alloy aluminum wirerod that is used to produce wires and cables; we use part of it to produce aluminum wire nets as well as rivets.”

He mentioned the production of parts and components for power transmission lines as another application of alloy wirerod. “Alloy wirerod cannot be used as the core of self-supporting cables in ACSR; only steel is used for this purpose. Alloy wirerod is sometimes used as shields to reinforce cables; they are also used in plastic hoses.”

How can we lay the foundations for the growth and development of the aluminum wirerod industry?

To this question, Farzaneh replied: “Given the massive reserves of oil and gas in Iran, power plants can be implemented, which can also produce fresh water as a by-product. Instead of transporting gas towards the central part of the country, we can build power transmission lines to electrify towns and villages. An added advantage is that by using electricity instead of gas for household applications, pollution in big cities will be reduced. Domestically-produced aluminum is available for such applications.”

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