The special meeting on examining production obstacles in the steel supply chain was held on October 1, 2024, in the Parliamentary Commission on Industries, with the presence of representatives from various sectors, including producers, government organizations, and relevant institutions.
This meeting was chaired by Dr. Moseri with the aim of addressing the challenges of the steel industry and improving production conditions, particularly in the areas of pricing and regulatory issues.
One of the most important issues discussed in this meeting was the regulatory violation cases, which in recent years—particularly since 2018—have imposed heavy financial pressures on production units due to the requirement to offer the entire steel supply chain on the commodity exchange.
According to Jahandar Shokri, CEO of Bisotoun Steel, insufficient awareness of minimum supply regulations and administrative complexities have created challenges for some units. These issues have led to numerous cases being filed and increased costs for steel producers.
In the pricing sector, the production of approximately 31 million tons of steel, while domestic consumption remains below 50%, has resulted in only 20 to 30% of the output being traded on the commodity exchange. This situation necessitates a review of the minimum supply requirements and pricing calculations.
Shokri further stated that this condition has significantly reduced profitability, especially for smaller companies, and has even led some units to face losses.
Another issue is the significant decline in steel exports due to the disparity between the NIMA exchange rate and the free market rate. In recent years, these discrepancies have led to a sharp reduction in steel exports for many manufacturing companies, with some even halting their export activities altogether.
In the past, exporters and importers supplied the required foreign currency through mutual agreements, but this process has now been disrupted.
The increase in electricity costs and issues related to energy imbalance were also key topics discussed in this meeting. According to the attending producers, the multiple-fold difference in electricity rates for the steel industry compared to other sectors has placed additional pressure on this industry.
The sudden decisions by the ministry regarding electricity price hikes and their retroactive enforcement have created serious challenges for publicly traded companies.
At the conclusion of the meeting, Dr. Moseri emphasized the urgent need to resolve these issues and requested the Steel Producers Association to prepare a comprehensive report on electricity consumption concerns and regulatory violation cases.
Additionally, it was decided that necessary changes in commodity exchange supply and pricing calculations would be implemented in collaboration with the Ministry of Industry, Mine, and Trade and other relevant institutions.
On the other hand, with the ongoing follow-ups, it is hoped that new directives aimed at facilitating exports and addressing foreign exchange barriers will be implemented in the near future.
This meeting is an important step toward overcoming production obstacles and improving the conditions of the steel industry in Iran, which, with the support of both government and private institutions, can help rejuvenate this strategic industry.
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