Iran Metals Report

Published 22 October 2014

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Iran Metals Report

The outlook for Iran's metals sector is improving for the first time years as sanctions begin to be eased following negotiations with the Western powers. On the whole, however, we are far from sanguine given our bearish outlook for steel prices and the fact that any rapprochement with the West, if indeed it happens, will be drawn out and not have a significant impact in the near term. We note with scepticism, Iran's plans to increase its steel capacity from 20mn tonnes per annum (mntpa) to 55mntpa by 2025, as well as a tripling of aluminium smelter capacity to 1.5mntpa.

While a cut in external trade has impacted negatively on the steel industry, isolation has ensured that imports have also been restricted. However, domestic industrial deficiencies in certain market segments mean that Iran will struggle to meet its own needs in spite of declining consumption. Crude steel output rose 11.1% year-on-year (y-o-y) to 13.27mn tonnes in the first 11 months of 2013, representing one of the strongest growth rates in the world, rivalling Turkey's.

Growth Slowing, But Still Elevated
Iran - Steel Output

Nevertheless, due to infrastructural problems and a lack of billet and rebar capacity, the country is still dependent on imports to serve the market, mostly from Turkey. Meanwhile, growth in the manufacturing of steel products has slowed markedly, with existing crude steel capacities unable to sufficiently supply to downstream industries and therefore exacerbating the dependence on imported supplies. Weak points remain, with flats demand coming under pressure as automotive output suffers from declining domestic demand. Over the medium term Iran will be reliant on exports at a time when it is becoming harder to sell on external markets.

Iranian trade has been affected by international sanctions, with the country having to manoeuvre strategically to meet domestic demand and maintain the robust production growth seen a few years ago. We  forecast that growth will remain robust in...

Table of Contents

BMI Industry View
7
SWOT
9
Metals SWOT
9
Industry Forecast
10
Steel: Reduction In Sanctions To Allow Growth
10
Table: Steel Production & Consumption (Iran 2010-2018)
13
Table: Steel Industry Historical Data (Iran 2005-2012)
14
Regulatory Development
15
Corruption
15
Tax Regime
15
Table: Iran - Political Overview
15
Commodities Forecast
17
Commodity Strategy
17
Ferrous Metals
18
Non-Ferrous Metals:
21
Aluminium: Prices To Remain Elevated Following Recent Dip
21
Copper: Chinese Weakness To Create Further Headwinds
22
Nickel: No Sustained Rally Ahead
24
Zinc: Subdued Short-Term Outlook Before Multi-Year Gains
27
Table: Select Commodities - Performance And BMI Forecasts
28
Steel: Prices To Head Higher From 2016
29
Table: BMI Steel Price Forecast
29
Short-Term Outlook (three-to-six months)
29
Long-Term Outlook
30
Production: Chinese Rationalisation Measures To Bite
31
Consumption: Slowing Demand Growth On The Horizon
32
Burgeoning Chinese Exports Will Not Last
33
Eurozone Growth Downgrade Highlights Long Road To Recovery
34
Risks To Price Forecast
34
Table: Steel Data & Forecasts
35
Competitive Landscape
36
Table: Production & Sales By Producer (2013)
36
Table: Middle East - Largest Listed Metal Producers
39
Company Profile
40
Mobarakeh Steel Company
40
Methodology
42
Cross Checks
42

The Iran Metals Report has been researched at source, and features latest-available data for steel, aluminium and other major globally-traded commodities. Our analysis covers all primary indicators, including production, exports and price, with our forecasts underpinned by BMI Research's macroeconomists global economic outlook. The report analyses trends and prospects and critically evaluates latest industry news, trends and regulatory developments in Iran.

BMI's Iran Metals Report provides industry professionals and strategists, sector analysts, business investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the metals industry in Iran.

Key Benefits

  • Benchmark BMI's independent metals industry forecasts for Iran to test other views - a key input for successful budgeting and strategic business planning in the Iran metals market.
  • Target business opportunities and risks in Iran through our reviews of latest industry trends, regulatory changes and major projects and investments.
  • Exploit the latest competitive intelligence and company profiles on your competitors and peers.

Coverage

BMI Industry View

A comprehensive summary of the impact and implications of the latest regulatory developments and key forecast indicators covering metals production, consumption and upside/downside risks to our outlook. The Metals SWOT analysis outlines strategic factors that affect the basic assumptions underpinning BMI’s forecast analysis, and taken together with BMI’s political, economic and business environment SWOTs, it gives a complete overview of market climate.

Industry Forecast

Industry forecasts to end-2019 for all key indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecasts:

  • Steel: Steel production & consumption (‘000 tonnes).
  • Aluminium: Aluminium consumption production & balance (‘000 tonnes).
  • Copper: Refined copper production & consumption (‘000 tonnes).
  • Zinc: Refined zinc production & consumption (‘000 tonnes).
  • Lead: Refined Lead production, consumption & balance (‘000 tonnes).
  • Nickel: Refined nickel production & consumption (‘000 tonnes).
  • Tin: Refined tin production, consumption & balance (‘000 tonnes).

Regulatory Development

Details of the industry regulatory framework, relevant key legislation and environmental standards that impact the metals industry. The regulatory developments section provides analysis of the overall regulatory burden, the tax regime (including income tax rates), bureaucratic framework, corruption and a country specific political overview. Details of the industry regulatory framework provide information on relevant key legislation and regulations that will impact the metals industry.

Commodities Forecast

Provides in depth coverage and forecasting of steel prices and includes BMI’s core view of what to expect in upcoming months. Within the monthly metals update, BMI provides performance data and key forecasts for select commodities, including prices for aluminium, copper, gold, iron ore, lead, nickel, palladium, platinum, silver, steel (MEPS Carbon Steel), tin and zinc.

Competitive landscape

The competitive landscape section provides comparative company analyses of detailed financial data for key listed metals firms, ranked in order of market cap (USDmn).

Company Profiles*

Examines the competitive position and short to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects. Details of products and services provide a full overview of each company’s operations.

Sources

The Metals Reports draw on an extensive network of primary sources, such as manufacturing associations, statistical bureaus, government ministries, national chambers of commerce and industry, national statistical offices, government ministries and central banks, and multinational companies.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.

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Testimonials

'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc