Steel production declines by 6.7% due to energy shortages: ISPA
The Iranian Steel Producers Association (ISPA) released data showing a 6.7% decline in Iran’s steel production over the first 11 months of the Persian calender year 1403 (March 20, 2024 to February 18, 2025). The drop is attributed to imbalances in the industry, including severe electricity and gas shortages.
According to ISPA figures, the decline in steel production has intensified due to energy constraints, wrote IRNA.
The production drop, which stood at 4.8% in the first nine months of the year, rose to 5.5% by the 10-month mark and reached 6.7% in the latest 11-month report. Energy limitations have reduced the country’s semi-finished steel production by approximately 2 million metric tons, valued at around $1 billion. About 75% of this decline occurred in steel billet production, highlighting the disproportionate impact of electricity and gas shortages on small and medium-sized private sector units.
Iran’s steel industry, a key pillar of its economy, has faced some challenges in recent years. The sector, which contributes significantly to the country’s non-oil exports, has been hit by international sanctions, fluctuating global demand, and domestic energy shortages.
Iran holds some of the world’s largest iron ore reserves, but its steel production capacity has been constrained by outdated infrastructure and insufficient investment in modernization. Additionally, the government’s focus on increasing self-sufficiency in steel production has often clashed with the realities of energy supply limitations, particularly in natural gas and electricity, which are critical for steel manufacturing.
Severe gas restrictions have also hampered the production of newly operational direct-reduced iron (DRI) plants. While iron ore concentrate production has increased, pellet production has declined. After billets, rebar experienced the steepest drop in production within the steel supply chain, primarily due to a sharp downturn in the domestic market and reduced exports.
Steel exports decline by 13%
Export data for the first 11 months of the year shows a 13% decline in the value of Iran’s steel chain exports, equivalent to $892 million. This marks a significant increase from the $792 million drop reported in the first nine months. Billets and slabs, Iran’s primary steel export products, saw the largest volume declines at 17% and 29%, respectively.
On a positive note, exports of raw materials in the steel chain, including iron ore concentrate and pellets, have continued to grow. Sponge iron (and briquette) exports also rose by 14%, with most of the growth occurring in the first half of the year.
The decline in steel production and exports underscores some challenges facing Iran’s industrial sector. As the government seeks to boost non-oil exports and reduce reliance on crude oil revenues, addressing energy shortages and modernizing infrastructure will be critical to reviving the steel industry and sustaining economic growth.