“What profile producers really want is the easing of exports and the resumption of civil projects”
CEO of Tehran Shargh Industrial Group:

“What profile producers really want is the easing of exports and the resumption of civil projects”

Domestic production of steel pipes and profiles exceeds domestic demand. Companies might not be able to operate at their nameplate or economical capacity if the downstream sector goes into recession or consumption is disrupted. Under such circumstances, exports can really help to cut their losses or even bring them profits. Now that the market is weak, profiles are in surplus production. Companies need to export their products, but with untimely directives and bad planning by the government and relevant organizations, producers are having a hard time, hoping that the officials might understand the situation and help eliminate obstacles to exports. To further discuss these issues in this Insider Talk, FelezatOnline has interviewed Mahmoud Saberi, CEO of Tehran Shargh Industrial Group.

Where does the company stand in the production of pipes and profiles?

The Tehran Shargh Industrial Group comprises Tehran Shargh Pipes & Profiles and Meyami Steel Shargh. The two plants have a total capacity of 720 thousand tonnes together, but actual production in Tehran Shargh Pipes & Profiles with one working shift is 200 thousand tonnes per year and that of Meyami Steel Shargh is 120 thousand tonnes per year. The company produces a wide variety of pipes and profiles, with thicknesses from 1mm to 10mm. Profiles have sections from 10×20 cm to 320×320 cm. Pipes have diameters of 0.5 to 16 inches. About 200 people are directly employed for the company.

Our profiles are mostly used in construction and industry. Pipes are used in construction, industry, water systems, automotive, and transfer of oil and gas.

Our products are of great quality. All tests including tear, tensile stress, and bending are performed before and after production. Other tests can be done if necessary according to the customer’s needs.

The technology we use is the same that many other producers of pipes and profiles around the world use. It is used in Europe to produce pipes and profiles. Using new technology and machinery has enabled us to accelerate the production of high-quality products.

Given the sluggish demand, we have tried to move forward in sales and production by creating new, high-quality products. Our products are partly consumed domestically and partly exported. The profiles can be exported anywhere in the world. We even exported to Europe, although via middlemen. Most neighboring countries including Iraq, Afghanistan, and southern Gulf nations demand our products; we have exported most of our products to these countries. For instance, we have exported 7-8 thousand tonnes of pipes and profiles to Qatar since the beginning of the year. We have also exported to Iraq, Afghanistan, Turkmenistan, Azerbaijan, Uzbekistan, Turkey, and Oman.

How is the domestic consumption of profiles?

Over the past few years, the dominant recession has been intensified by the decline of government budget in civil projects. Like any other industry, the profiles industry is also stagnant. Things are worse than last year and only half of the factories are operating. Factory activity of profile plants has declined year on year. When civil projects were running, many companies found the opportunity to implement their development plans and ramp up production.

The development of consumer industries including construction, machine building, automotive, oil and gas, etc. can help the production of pipes and profiles. With the decline in construction, the industrial sector is now helping the producers of pipes and profiles.

Many producers complain about the tightness of raw material availability. Do you share that concern?

We had some problems with raw materials last year when exchange rates spiked as part of the raw material (hot-rolled coils) was imported. The profiles were then exported to make up for the imports. Our production and sales last year fluctuated as imports were halted and there was a shortfall of HRC.

We currently don’t have a shortage of raw materials because Mobarakeh Steel produces high-quality HRC, resulting in high-quality Iranian profiles in the export market. Sheets used in the production of profiles are mostly ST37 or SJR235, which are used in construction and industrial applications. Iran is self-sufficient in the production of these sheets. Profile producers have problems with cold-rolled coils and sheets under 1.5mm thickness. These sheets are also more expensive than the common HRC. Thus, it is difficult to compete with foreign producers who have thinner and lighter profiles. Moreover, the capacity for these sheets is very small in Iran. New capacities need to be developed.

How does Iran’s profile production compare on a regional scale?

Among the neighboring countries, Turkey has developed good capacities for profile production, making it difficult for Iranian producers to keep up. But as exchange rates went up last year and the availability of high-quality raw materials improved, we were able to enhance Iran’s regional position. Raw materials are mostly produced domestically and large imports are obviated. Producers can solidify the regional position if Mobarakeh Steel can provide them sheets thinner than 2mm.

How can exports help improve Iran’s profile production industry? What are some challenges to exports and how can they be removed?

With the launch of new capacities for HRC production in Mobarakeh Steel, raw materials for the production of pipes and profiles were supplied. Our total output in the first half of the year was 20 thousand tonnes on average per month, but exports fluctuated. Due to the directives by the Ministry of Industry, Mine, and Trade and its mining department, there were a lot of problems for downstream businesses. One such directive required companies to offer their products on the IME; this has hurt both producers and exporters. Our company still has problems exporting. Things are better than a year ago, but we have not been able to export as well as we had expected. Since the beginning of the year, about 25-30% of our products has been exported to neighboring countries.

In the course of last year, the price of pipes and profiles spiked, yet producers could still consider exporting to neighboring countries. There are too many problems for exports, mostly due to directives issued by the government. These directives are mostly unrealistic and without any technical basis. Moreover, the customs don’t have clearly defined plans, making it impossible to plan for exports. All export goods have been unloaded at the customs, waiting for entrance.

The government can’t be held responsible for some other problems and obstacles to exports. For instance, exports to Iraq have been halted for Arba’een; Iraq does not permit imports during the ritual.

Another problem is that destination countries have defined import duties. Iraq is considering increasing import tariffs on steel and might put Iranian steel profiles on the tariff increase list. The Iranian embassy in Iraq as well as other countries must intervene to facilitate export conditions for producers. One ministry should be appointed to the financial issues of exporters. By reducing export risks, exporters can have better turnover and will be more interested in exporting their products. With exports, producers can ramp up their output to levels closer to their nameplate capacity.

Timely notices and support by Iranian embassies in other countries can really help producers in terms of exports. When exporters have problems in neighboring countries, the embassies can do nothing to help them. People who have been appointed to such positions are not doing their jobs right.

If there is anything happening to exports such as any new directives for exports and customs or borders closing down, exporters must be informed in advance. There was a lot of incoordination and our company was severely hurt. We hope for more supervision over customs. We also hope that the Ministry of Industry, Mine, and Trade will have closer cooperation with producers to improve their conditions.

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مطالب مرتبط
“Owing to new products, steel profiles are more competitive”
“The production of profiles is a progressive industry”
“There is a shortfall of sheets for the production of steel pipes and profiles”
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بنر صبانور
بنر صنیع کاوه
 سازمان خصوصی سازی- عمودی صفحه اقتصاد
فولاد سیرجان ایرانیان
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