MSC Local Sales Up in Spring

5-Month Crude Steel Output Exceeds 7.5m Tons

P.3

P.7 P.5

NEWSLETTERSTEEL

Sharivar 1395 www.msc.irAug/sept. 2016 No. 13

Mobarakeh

Iran-Europe Economic CooperationCenter Opens in Berlin

Public Relations Offices Should Reflect of People’s Opinion

CIS Steelmakers Focus onSemi Finished Exports

MSC, World’s Largest SpongeIron Producer

P.6

P.3

P.8

P.12

Mobarakeh Steel Company (MSC) has produced multicolor sheets, said Nader Hosseinzadeh, the director of the steel giant’s Cold Rolling Plant. In light of the fact that production of a variety of new

products was among major goals of MSC this year [started March 20, 2016] the unit that rolls out galvanized and color-coated sheets put production of new items on its agenda. “That was followed by research into what was available on the market, how the new items had to be produced, and how the paint needed in production process had to be procured.” Among the new items the company wanted to produce were

multicolor sheets whose experimental production started successfully on June 29 in cooperation with Tuka Paint Company, he said.He went on to say multicolor paints reflect light differently

when looked at from different angles, a quality that makes

them ideal for internal decoration as well as for the façade of buildings. Hosseinzadeh further said the price of multicolor sheets

which can be used in the façade of hotels, buildings and conference halls is higher than sheets with normal coating. “Since the use of such sheets eliminates the need for other decorative coatings, they push down the overall costs of construction, yet render the buildings more beautiful.” In conclusion, he thanked the management of coated

and finished products as well as the personnel of the technical office, the galvanized and color-coated units, laboratories, the units supervising the sales and procurement of raw material and energy, MPT, the quality control unit, Tuka Paint Company and all others who contributed, one way or another, to the accomplishment of the task at Cold Rolling Plant.

Mobarakeh Steel Company (MSC) hosted thefirst managerial meeting of the Iranian Mines andMining Industries Development and RenovationOrganization (IMIDRO) which focused on “the

plans and outlook of mines and mining industriesin the Resistance Economy” in the year toMarch 20, 2017.In the gathering, the head of IMIDRO’s board ofdirectors mapped out the plans and the outlook

of mines and mining industries in the resistanceeconomy, and managing directors ofcompanies which are in charge of IMIDRO’sprojects laid out the objectives and plans of their...

Leader of Islamic Republic of Iran Ayatollah Seyyed Ali Khamenei called on the government to focus primarily on implementing a national economic plan to boost production and revive the export sector.“Today, economic problems and challenges are top issues

for the country, whose resolution depends on the thorough implementation of the Resistance Economy policies,” the Leader was quoted as saying by his official website.Resistance Economy is a comprehensive economic initiative

outlined by the Leader to wean the country off oil revenues by boosting production and productivity.Ayatollah Khamenei made the statements in a Wednesday

meeting with President Hassan Rouhani and his Cabinet on the occasion of Government Week (Aug. 23-29).“Any project that interferes with the principles of Resistance

Economy should be abandoned,” he said.He cited handing over affairs to the private sector and offering economic incentives as measures required to facilitate the plan’s implementation.Ayatollah Khamenei underlined the need to ease restrictive regulations and cut red tape in the production sector.On foreign policy, the Leader said the government should use its diplomatic resources to help develop ties with countries in different regions of the world.“Asia, Africa and Latin America should have a

proportionate share in the country’s foreign policy,” he said.The Leader said the government should deal with crises in West

Asia “carefully, vigilantly and actively”, considering their “very complicated and inter-related” nature.“We should use our diplomatic capacities to develop our

economy,” he said.Ayatollah Khamenei touched on the July 2015 nuclear deal

between Iran and world powers, saying the unreliability of the US in honoring its promises should teach a lesson.“This experience teaches us that no promises of any

US administration can be trusted,” he said.The Joint Comprehensive Plan of Action, the official name of Iran’s nuclear program, was signed between Iran and P5+1 (the US, Britain, Russia, China and France, plus Germany).According to the deal that went into effect last January, Iran

committed to contain its nuclear work and in exchange, the UN, EU and US undertook to remove their nuclear-related sanctions on Iran.The UN nuclear watchdog, the International Atomic Energy Agency, has confirmed Iran’s compliance with the terms of the deal. However, Iran has voiced grievances that the other side, particularly the US, has not fully met its commitments, which has prevented it from reaping the full economic fruits of the landmark accord.

Cold Rolling Plant Produces Multicolor Sheets to Expand Product Basket

P.4 Sangan Pelletizing Plant Close to Completion

Leader Sees Economy as Top Priority

Inauguration of Two Pelletizing Plans by 2017

2nd Iranian Iron & Steel Conference26 – 28 September 2016

Abbasi Hotel, Esfahan, Iran Connecting the Iranian iron ore and steel markets with the world, this conference will be the ideal place to learn about Iranian markets and create international links.

metalbulletin.com/event

The annual production capacity of Mobarakeh Steel Company (MSC) will increase by two million tons in the near future, announced the

company’s managing director.Bahram Sobhani further pointed to the

launching of iron briquetting project in the company and said an extra 500,000 tons of sponge iron powder will be fed to the briquetting plant annually.The official added that the desulfurizing plant went into operation last week and the company

is now able to produce desulfurized steel slabs.Sobhani said the company will attain its goal of increasing steel production once all development projects go on stream.The official put the current annual

production of MSC at 5.2 million tons

adding that the figure will increase to 7.2 million tons in about one month.The company produces 750,000 tons of thin steel slabs annually and plans to increase this to 1.5 million tons by mid-March, said Sobhani.

MSC to Raise Annual Steel Output by 2m tons

Leader Sees Economy as Top Priority

Steel Industry Accounts for One-Fourth of Jobs Created in Isfahan

P.4P.1

NEWS

STEEL NEWSLETTERwww.msc.ir Aug/sept. 2016 No. 13

03National

The casting unit of Mobarakeh Steel Company (MSC) has for the first time produced steel blooms following the completion of the product basket at the steel giant. Steel Newsletter quoted MSC The ex-Director of Operations Mahmoud Arbabzadeh as saying that Mobarakeh Steel Company takes pride in the fact that its staff remains steadfast on the path to excellence and is never neglectful of progress. He went on to say the rollout of new

products with higher added value and MSC’s effective presence in recent years in local and foreign markets and world forums have come on the back of practical measures by MSC managers and personnel in line with the principles of the Resistance Economy which are a source of pride for our Islamic country. As it was previously reported, following calls – by the esteemed managing director of MSC – for development of a range of new products to meet market demands, alteration of the mold and cooling system of the casting machine enabled us to produce, for the first time, blooms 300*200 mm in size, he said. Arbabzadeh further said the rollout of grade-four high-strength steel blooms mark the first time MSC produces five 10-meter blooms in the Continuous Casting Plant. The blooms which are cast by Machine No. 4 have quality surface texture. After cooling, they are physically analyzed and undergo tests which detect internal defects, determine strength and measure their tension and impact levels before being shipped to rolling mills, he said. In conclusion, he said tireless efforts by

staff at the Continuous Casting Plant made the feat possible, adding the personnel of Central Repair Shop, Metallurgy and Production Methods, and Sales and Marketing contributed to those efforts. He congratulated all MSC staff for this achievement.

Saudi Arabia produced 5.7 million tonnes of crude steel in 2015, 10% down on 2014 production. This volume represents production from state owned producer Hadeed, according to the World Steel Association. The country ranked 25th biggest steel producer in 2015, the same rank as 2014. However, steel demand growth in Saudi Arabia is expected to gradually decline, especially after 2020, according to Abdullah Al-Zahrani, manager at Saudi Arabian Basic Industries Corp (Sabic) speaking at MB’s Middle East Iron and Steel Conference in December.

Qatar produced 2.6 million tonnes of crude steel in 2015, less than the 3 million tonnes in 2014. The FIFA football World Cup scheduled to take place in Qatar in 2022 is expected to increase steel consumption, and the country’s steel producer, Qatar Steel, is increasing its production. The company’s Rolling Mill No.2, located in the country’s Mesaieed Industrial City, produced 1 million tonnes of rebar in 2015. This is a record for the mill, whose design capacity is 700,000 tpy of rebar, with 8-40 mm diameters. Qatar Steel has more than 1.5 million tpy of rebar capacity in Qatar itself, and a further 300,000 tpy of rebar and 240,000 tpy of wire rod capacity in the UAE. The company also produces 2.4 million tpy of direct reduced iron (DRI).

MSC Local Sales Up in Spring

Saudi Arabia Qatar

MSC Rolls out First Steel Blooms

South Korean Co. to Decide on Steel Project

Shortage of iron ore, scrap iron and pellet is the main impediment to growth in the domestic steel industry and the realization of the targets set in the 20-Year Vision Plan (2005-25), an advisor to First Vice President Es’haq Jahangiri said.Mostafa Moazzenzadeh explains

that Iran’s scrap iron sources are running out, and unless the mineral exploration projects underway lead to new iron ore reserves, import of iron ore appears to be inevitable.“Steel capacity expansion will no

longer be economical if we start importing iron ore,” Eghtesad News quoted Moazzenzadeh as saying.Iranian steel mills need 6 million

tons of scrap metal per year to reach the 55-million-ton output target stipulated in the Vision Plan.By using scrap iron, steelmakers can

save on energy and raw material. It also has the added benefit of reduced pollution. Every ton of new steel made from scrap iron saves 1,115 kilograms of iron ore.However, in the absence of scrap

iron, steelmakers have no option

but to resort to mineral reserves. But Iran’s iron ore riches, although sizable, is inadequate to meet the ambitious capacity expansion target.Iran accounts for about 3% of the

global iron ore reserves estimated at 4.5 billion tons.Given the ministry’s iron ore

concentrate and pellet production goals by 2025, Iran’s iron ore reserves will be depleted in less than 28 years, that is if iron ore producers manage to boost their current 30.4 million-ton capacity and maintain the output in a globally turbulent commodity market.According to the roadmap set by

the Industries Ministry, iron ore concentrate production capacity should reach 50 million tons by the end of 2018, 71 million tons by 2021 and 72 million tons by 2025.Pellet-making capacity is also

stipulated to rise to 48 million tons by 2018, 82 million tons by 2021 and 85 million tons by 2025.All eyes are on Iranian Mines and

Mining Industries Development and Renovation Organization’s mineral exploration projects. The

organization undertook an operation in 2013 to explore over 250,000 square kilometers of the country’s area over a course of three years. More than 400 million tons of proven iron ore reserves have been discovered so far and the project is scheduled to conclude by the yearend.

Sangan Iron Ore Mine, located in Khorasan Razavi Province, is home to Iran’s largest and the world’s ninth largest iron ore reserves, estimated at about 1.2 billion tons. It has the capacity to produce 15 million tons of iron ore pellets and 17.5 million tons of concentrate annually, according to

Ali Seddiqifar, managing director of Sangan Iron Ore Complex.Currently, three iron ore concentrate production plants, each with production capacities of about 2.5 million tons per year, and a pellet plant with a 2.4-million-ton capacity are under construction in the region.

The chairman of the Expediency Council says public relations offices in different organizations and institutions are expected to reflect the viewpoints of people and the establishment, including what should and should not be done.Ayatollah Akbar Hashemi Rafsanjani

made the remark in a with the founding members of Iran’s Public Relations House and said public relations offices should have a two-way approach in expressing the viewpoints of the establishment and members of the public and in conveying their messages to each other.According to the correspondent of Steel

Newsletter, he further said public relations offices in organizations and institutions should receptively hear the critical points and [honestly] write down or articulate what they hear. Ayatollah Rafsanjani characterized

truthfulness as the key to success for public relations offices in any society or governance and said, “By nature, truth has some attractions which are accepted by the human temperament. If the truth is steeped in unreal ornaments, it would have a short life span even if it resonates

with the public.”The top councilor referred to the stunning

growth of virtual media in the country and their impacts on public opinion in society and said gone are the days when the dissemination of information was monopolized in societies. In comments directed at those in charge

of public relations offices in the country, he said, “I advise you – as the mouthpiece of people and the establishment – to express things in a straightforward and honest way.”Those in charge of public relations offices shoulder a heavy responsibility, Ayatollah Rafsanjani said, adding the fact that all organizations and institutions have an office to handle public relations and removal of such offices has never been contemplated suggests officials at all levels in different organizations and institutions have to convey their viewpoints to people in society and listen to People’s Opinion [and expectations]. The Expediency Council chairman also

said the intermediary role public relations offices play is very important, and added, “We should not forget that we are dealing with informed people who like to hear the truth from the establishment’s tribunes

and media outlets. Otherwise, people have easy access to foreign media which have developed a full understanding of the culture of their audience and professionally instill their own goals and plans into their [target] audience”. Those working in public relations offices

should know that they are working in an important part of their organization or institute, he said, adding, “The understanding people have developed in all parts of society has made it easy and at the same time complicated for public relations offices to pursue their work, because satisfying the public is a tough responsibility and those working in public relations should base their work on psychology and sociology”. At the start

of the meeting, some founding members of Iran’s Public Relations House offered a report on their plans and activities, and highlighted the need for efforts to boost public relations in the country.On the sidelines of the meeting,

Mobarakeh Steel Company’s Public Relations Manager Mohammad Nazemi Harandi explained the activities of the giant steelmaker which is the biggest economic institution that has emerged after the Islamic Revolution and said, “As a company which was set up and inaugurated during the Sacred Defense and Reconstruction era on the back of all-out support by officials, MSC has raised its production capacity to 7.5 million tons per year from an initial 2.5 million

tons. Mobarakeh Steel Company which produces half of all the steel consumed in the country is the largest steelmaker in the Middle East and North Africa. It exported 1.8 million tons of steel products in the year to March 2016, with Europe importing more than 60 percent of its products”. The chairman of the Expediency Council

expressed satisfaction with the success MSC has pulled off and said the exports of products to Europe mean Mobarakeh Steel Company produces quality items.He then recalled memories from the

time Mobarakeh Steel Company was being constructed and said opposition by some to the national project was the result of their lack of understanding of the future effects of the steel industry. He also thanked the company’s managers and staff for making such progress. At the close of the meeting, an accolade of Iran’s Public Relations House was awarded to Ayatollah Hashemi Rafsanjani thanking him for his support for public relations offices in different periods, especially when he served as parliament speaker, leader of the Sacred Defense, president and the chairman of the Expediency Council.

Mobarakeh Steel Company (MSC) has sold and received orders for 1.662 million tons of steel products in the three

months to June 21, 2016, the steel giant’s deputy director for sales and marketing said. Mahmoud Akbari further said the

considerable rise in sales as well as in the orders customers have placed with MSC comes on the back of a relative increase in demand on the market and is in line with the company policy to meet the needs of the local market maximally.He further noted that during the

three-month period the volume of local market orders registered a 91 percent growth over corresponding period last year. “The hot rolled products accounted for around 66 percent of all items sold during the same period. The share of cold rolled and pickled products stood at 29 percent. Coated products, including tin-coated, galvanized and color-coated items, made up the remaining 5 percent. The largest amount of increase in orders placed with MSC had to do with hot-rolled products.” Given the relative increase in demand

for MSC products and the company’s

policy to meet the need of the market for pipes and profiles, MSC sales posted an unprecedented 352 percent increase over last year, MSC’s deputy director for sales and marketing added. In light of the fact that presence in

international markets is a strategic goal of Mobarakeh Steel Company, some 20 percent of MSC products has been set aside for exports, he said. Akbari noted that MSC produces a

wide range of products and that the domestic market is categorized based on the kind of products used and where they are used. “Accordingly, sales and marketing plans are worked out. Producers of pipes and construction profiles, metal and steel industries, the automotive industry, heavy metal equipment and pipes are the biggest customers of MSC. Sales to producers of pipes and construction profiles as well as metal and steel industries have posted the biggest hike.” Besides the strategic goals of MSC,

expansion of production with a focus on special products with high added value has been an approach which has always drawn a lot of attention, he said, adding in the three-month period sales of such products, including API

sheets which are used in the oil and gas industry, and IF sheets and micro-alloys used in the automotive industry have risen to 500,000 tons, accounting for 31 percent of the overall sales. The deputy director for sales and

marketing at Mobarakeh Steel Company further said in the same period delivery of products has hiked too. In the month to April 20, shipment of products increased to a record 598,000 tons. In conclusion, Akbari

credited the efforts and cooperation of MSC staff in different divisions for the success the steelmaker has achieved. “God willing, such cohesion and cooperation will be the key to MSC success and excellence in the future.”

Raw Material Shortage Looms Over Steel Industry

Ayatollah Rafsanjani:

Public Relations Offices Should Reflect People’s Opinion

South Korea’s POSCO is expected to complete by next month a feasibility study for the construction of a steel plant in Iran.The company signed a memorandum of understanding aimed at producing value-added flat steel with the Pars Kohan Diyar Parsian Steel Complex (PKP) back in May, concurrent with South Korean President Park Geun-hye’s visit to Tehran.Within the framework of the MOU the Korean

firm is to supply its FINEX technology. POSCO will have an 8% stake in PKP, if it decides to go ahead with the project.FINEX is the name of an iron-making technology jointly developed by now-defunct Austrian engineering and plant building company Siemens VAI and POSCO. Molten iron is produced directly using iron ore fines and non-coking coal rather than traditional blast furnace methods through sintering and reduction with coke.Elimination of preliminary processing

reportedly makes the plant for FINEX less expensive to build than a blast furnace facility. Additionally a 10-15% reduction in production costs is expected through cheaper raw material, reduction of facility cost, pollutant exhaustion, maintenance of staff and production time.The prospective joint venture with PKP

includes two phases, according to Metal Expert – a Ukraine-based provider of news and analysis for steel products and steelmaking raw material industries. The first consists of a 1.6 million ton-per-year integrated steel mill using FINEX technology for the production of hot rolled coil (HRC). Under the second phase a cold rolled coil (CRC) and hot dipped galvanized coil (HDG) mill of 600,000 tons per year will be built.Other VentureThe POSCO-PKP joint venture, however,

will not be the only steel project where the South Korean giant plans to participate. It has reached a preliminary agreement worth €1 billion that will offer in Iran its FINEX and Compact Endless Cast and Rolling Mill (CEM) technology. Based on this business model, POSCO will collect royalties from steelmakers using its technology, as well as part of the revenue from orders won by producers using their management systems.CEM is an advanced process technology that allows mass production of hot-rolled products through a directly connected configuration between one casting line and one rolling line. It operates in both batch and endless rolling modes, which are mutually convertible at any time. The endless rolling mode is selected for thin-gauge products, and converted into the batch rolling mode for thick-gauge products or certain special steel grade products. This convertibility greatly widens the product range of the CEM process, according to POSCO’s website.POSCO is the world’s fifth-largest

steelmaker by production. While European steelmakers have been hit hard by global oversupply, the South Korean group posted a $310 million net profit for the January-March period. It marks a return to the black for the company, which last year reported its first ever loss as a flood of cheap Chinese exports drove steel prices to their lowest level in more than a decade.

STEEL NEWSLETTER

NEWS

www.msc.ir Aug/sept. 2016 No. 13

National02

A host of Mobarakeh Steel Company (MSC) senior officials have visited the site of Sangan iron ore concentrate and pelletizing

projects to get a firsthand account of the progress the twin projects run by MSC have made. According to the correspondent of

Steel News Letter, Ahmad Saeedbakhsh, MSC deputy director in charge of the steelmaker’s expansion projects, said the visit was meant to allow the senior managers of MSC to see for themselves how much these projects have come along and give assurances to the contractors of the projects that Mobarakeh Steel Company is determined to see the projects operational. He further said that there have been

some delays on certain fronts in these projects and MSC expects the contractors to do more to speed things up. “[During the visit] the obstacles standing in the way of these projects were examined and mechanisms to those problems were floated. Given the progress the pelletizing project has posted, we hope it will become operational shortly.” And Farzad Arzani, MSC’s chief

technology officer, said given that Mobarakeh Steel Company has invested in the iron ore concentrate and pelletizing projects, the overall development of the Sangan region is on the agenda of the

steel giant. “The contracting group needs to weigh and address the problems more aggressively. It also needs to rest assured that MSC will throw its weight behind it in implementing the project.” He further said what is important is

that the operations systems of MSC, both managerial and operational, are fully executed in these projects. “The Technology Department of Mobarakeh Steel Company is determined to simulate all operational and managerial systems in cooperation with the MSC engineering arm and Sangan Steel Company to enable Sangan to develop robust operational systems on all fronts.” And Amir Hossein Naderi, the chief

financial officer of Mobarakeh Steel Company, described Sangan as one of the most important projects MSC is running. “Accordingly, MSC has provided adequate finances for the iron ore concentrate and pelletizing projects and the launch of these projects will have a huge impact on the profit margins of MSC. By providing timely, adequate finances, MSC has done its best to ensure the swift completion of these projects.” Meanwhile, the managing director of Sangan Iron Ore and Steel Company said Sangan Steel Project is one of the largest run by MSC in eastern Iran. It is designed to complete the steel production cycle. In addition to creating added value, Mobarakeh

Steel Company has honored its social responsibility in this region. The visit to Sangan by senior managers of MSC, which bankrolls the project, means the steel giant wants the project completed soon. It is also a harbinger of better regional infrastructure.” Mir-Mohammadi went

on to say the pelletizing project will soon come on stream. “In light of the support the Ministry of Industries, Mines and Trade lends to this project and the emphasis the MSC managing director and his deputies have laid on provision of finances, we hope the iron ore concentrate project gathers

more steam and becomes operational next year [starts March 21, 2017]. That will amount to completion of the production cycle from iron ore to sheets.” The pelletizing project has reportedly made 86.73 percent progress and will soon become operational.

Italian steel processor Marcegaglia and Iranian steel-maker Mobarakeh Steel signed a Memorandum of Understand-ing (MoU) on 12 April for the supply of coil and slab from Iran. According to the MoU, the Iranian steel company will allocate about 50,000 tpm of hot-rolled coil, cold-rolled coil and hard steel sheet for deliveries to Marcegaglia. This quantity may be increased over the duration of the contract. Mobarakeh Steel will also fix al-locations of 20,000-30,000 tpm of prime slab from its subsidiary Hormozgan Steel, as well as slab from other mills, for coil and plate production. This volume may be increased to 50,000 tpm. The two companies are also implementing other long-term contracts for finished products.

The UAE was the only Middle East country whose production increased in 2015. It produced just over 3 million tonnes of crude steel in 2015, a 25.77% increase from 2014. The country ranked 38th biggest steel producer in the world, its sole steelmaker being Emirates Steel. The company expects steel consumption among the Arabic nations to rise to 57.3 million tonnes in 2016 from 54.6 million tonnes in 2015, a 5.1% increase, according to a statement in November 2015. “In the UAE, projects planned in the next ten years are worth a further $227 billion. For the entire GCC region, projects under construction are valued at $620 billion, and a further $770 billion is planned in the next ten years,” the release said.

MSC to Launch Sangan’s Concentrate and Pelletizing Projects

UAE

Indigenizing Gland WaterPump saves over 50’000 $ for MSC

Posco plans to construct a $19 million, 136,000 sq ft (12,600 sq metre) wire rod processing facility in Indiana, USA. The new 25,000 tpy plant will process steel wire for fasteners, nuts and bolts earmarked for delivery to the automotive sector, and will also act as a distribution centre for other Posco products. It will be located in the Port of Indiana- Jef-fersonville, and will create 60 jobs by 2018. Posco will source the wire rod from its plants in South Korea. The Indiana- Jeffersonville port already hosts twelve metal processors on a ‘steel campus’, with the port handling more than 1 million tons of steel in 2015.

Posco Plans Indiana Wire Plant

Marcegaglia and Mobarakeh Sign longterm Agreements

Portable Vacuum Unit at Pelletizing Plant launched

in Brief

Mobarakeh Steel Company (MSC) has tapped into its domestic potential to develop a 5.5 MW Impeller cooling fan for the Pelletizing Unit, a technician at the Central Repair Shop’s electric workshop said. Hamidreza Jalali further said indigenization of the fan, which came on the back of tireless efforts by members of staff at the electric workshop and the Central Repair Shop’s Technical Office, has contributed to conservation at the giant steelmaker.He said in light of the fact that the company was

unable to obtain the fan from domestic or foreign suppliers, the cooling fan was sent to the electric shop which took care of surveying, structure modification, material provision and assembly. The newly-built fan underwent static and dynamic tests before being charged into the motor. He pointed to the problems associated with

the previous fan and said when the 5.5 MW fan was sent to the electric workshop for repairs, its covers had to be disassembled so that the device which was built in an integrated way could be separated from the disassembly shaft by way of heating. “In the assembly process, the fan needs to be re-heated so that it can be assembled on the motor shaft. The heating and cooling of the fan during the assembly and disassembly processes cause deformation and cracks in the fan, raise its vibration level and cause contacts between the fan and its cover”. To get rid of this problem, the company decided

to build the fan in two pieces, Jalali said, adding in the new design, the fan and its hub were separately designed and developed. “This helps us disassemble the fan from its hub by loosening the related screws. Then the hub is detached from the shaft by means of a jack, a pump and a torch. During the assembly process, first the hub is heated and then it is assembled onto the shaft, the screws are tightened and the fan is placed on the hub. In this method, the fan does not get heated in both [disassembly and assembly] processes and will not be exposed to deformation or cracks.” Jalali said, “To design the new fan, we pieced

together an initial map. After removing the technical shortcomings in the final map, we tried to use the stocks of the Central Repair Shop to supply the needed material. Then we handled different processes such as cutting the material according to the map, machining, drilling and tapping in the light machining process and then grinding before completing the construction of the hub. “Later we started to build the fan blades by

cutting the fan mold and blades (the plates of the two sides) in the metal structure and by machining the blades and fixing them in the milling space. The fan was taken to the welding section for final assembly. The plates and blades were welded according to plan and were sent to the thermal operations unit for stress relieving. Finally the completed fan was charged into the warehouse

after undergoing LP balance tests in the predicted conditions. This assured the plant that there was a large enough stockpile of the newly designed fans,” he added.In conclusion, he thanked members of staff

at different parts of the Central Repair Shop,

including the electric workshop, the technical office of the repair shop, the mechanical workshop, the turning, boring and welding units as well as the thermal operations of the metal structure, who helped with the successful conclusion of the project.

MSC Central Work Shop Develops New Impeller Cooling Fan

The Pelletizing Unit of Mobarakeh Steel Company has successfully tapped into domestic potential to replace its [Italian-made] Gland Water pump with one designed here in Iran. Farhang Dabaghnia, a mechanical

repairs expert at the Pelletizing Unit, said the Pelletizing Unit and Emergency Purchase Unit worked together and replaced the foreign-made Gland Water Pump with a home-made device. He said to supply enough water for

Gland Water Pumps which provide water and mud for dust collectors at the Pelletizing Unit, we used to employ a high-pressure combined pump made by Italy’s Idromeccanica, adding since this pump was badly damaged after 25 years of operations, the company could not use it anymore and its repair was impossible due to the lack of spare parts in the country. He said in light of the fact that the

pump’s spare parts were not available,

it was taken off the purchase list, adding the urgent need for the pump at the production line of the Pelletizing Unit prompted experts at the unit’s repair shop to present technical information to the Emergency Purchase Unit, and it began to obtain the product. For his part, Mohammad Shafeei, a

technician at the Emergency Purchase Unit, said after an order placed for the emergency purchase of the pump, the company consulted and exchanged

information with specialized suppliers of the pump, adding we were given appropriate proposals. “Experts at the Pelletizing Unit

reviewed the order, and the company, which wanted the device to be supplied by official representative offices and domestic producers, bought the pump from Saman Abyar Co, the official representative of Pumpiran,” he said.“After putting together the pump, the

unit made preparations for installing

the device. Later the pump frame was designed and built. The pump was then installed and it is now functioning properly,” he added. Shafeei went on to say that obtaining

the pump from domestic companies helped the company reduce its expenses and save money, adding the company saved around $55,000 by building two pumps and buying one extra pump to take the place of the foreign-made device.

Call for actionTLD said that even though other big steel-importing countries took immediate measures against

dumped imports, Turkey failed to take such measures and became the main market for dumped products in 2015. Turkey’s steel imports from China tripled in the year to 3 million tonnes, while imports from Russia increased by 86% to 4.3 million tonnes. These two countries combined had a 52% share of Turkey’s total steel imports. It added that the decision by the government to support local suppliers needs to be implemented immediately, provided measures to improve competition in global markets are taken. The Turkish government needs to take steps to apply the decisions in its 2016 Action Plan, especially its “programme to reduce dependency on imports”, TLD warned in January this year. The association also complainedabout the recent price hikes in electricity, adding that the cost of electricity will be double at weekends and national holidays, leading to extra production costs for the steel sector.

A portable vacuum unit has been launched at the Pelletizing Plant, said the head of the plant’s produc-tion unit. Ali Jeylan further said the launch of the 300 kW vacuum unit in May which came on the back of studies involving similar plants overseas was meant to improve working conditions and reduce the amount of time required to prepare equipment for operations at the Pelletizing Plant. Meanwhile, Saeed Datli-Beigi, the industrial cleaning foreman at the Pelletizing Plant, said the launch of the unit speeds up the vacuuming of iron ore and pellet filings without spreading them and requires less manpower. He further said one of the most important activities undertaken during the shut-downs of the Pelletizing Plant is to clean the equipment in preparation for repairs. “To do that, we used to use traditional time-consuming methods. The launch of the new unit reduces human involvement in the process, improves safety, speeds up the cleaning and minimizes pollution.” In conclusion, he thanked the management of the Iron-making Plant, the head of the Pelletizing Plant, the engineering unit, the depart-ment in charge of contracts to purchase machinery, and the transport unit for their contribution to studies, pro-curement and the launch of the unit.

NEWS

STEEL NEWSLETTERwww.msc.ir Aug/sept. 2016 No. 13

05The manager of Saba Compact Strip Process

Plant has said in the year to March 2016, his company drew up plans for the production of sheets, 1,000 and 1,250 mm in width and 2 mm thick, in line with efforts to pursue the strategic goals of Mobarakeh Steel Company and meet customer demands.Ahmad Ahmadian further said in keeping

with the same plans, in the 30 days to June 20, 2016, the company will tap into the potential of its human resources to dedicate 70 percent of its products to items 2 mm in thickness, adding this shows considerable growth over the 12 months to March 2016 in which only five percent of the items was produced with a thickness of 2 mm.He recalled the use of such sheets in the

pipes, profiles and cold rolls plants and said, “Production of sheets with low thickness is advantageous because: it will meet market demands, expand the basket of products, prevent imports of steel products, and save money in the country. It also helps the company acquire the know-how of producing such sheets which is a competitive edge for producers of steel sheets.”That’s why production of these sheets is

a big source of pride for Mobarakeh Steel Company and Saba Compact Strip Process Plant, he added.In conclusion, he hailed the managing

director, senior managers of MSC for their support and thanked members of staff at Saba Compact Strip Process Plant who helped pull off such an achievement.MSC appoints head of professional hygiene,

safety, environmentThe managing director of Mobarakeh Steel

Company has named – in a decree – Hossein Modarresifar as the head of the professional hygiene, safety and environment.The decree reads:You are hereby appointed as head of

the professional hygiene, safety and environment office, effective as of May 16, 2016. You are expected to carry out your responsibility by respecting Islamic values, showing respect for human dignity, creating economic and social order and discipline, and abiding by professional ethics which are the key principles in Mobarakeh Steel Company.Hossein Modarresifar who holds a degree

in professional hygiene engineering was hired by Mobarakeh Steel Company in 2005. Before being appointed as the head of professional hygiene, safety and environment, he serves as head of the safety and fire department.

The year 2015 was a challenging one, and nearly half way into 2016 it is clear that this year is not likely to be much different. The main challenge is the existential issue of the economic and business climate for steel. As in 2014, demand rose in 2015. Indeed, apparent consumption in the EU grew by about 3.5% over the year. However, this increase in demand was entirely absorbed by imports. As a consequence, domestic deliveries fell by 0.3% over the whole of 2015, with a particularly negative trend in the second half of the year. Total steel imports increased by 23% in 2015 to 32.3 million tonnes, 5.9 million tonnes more than in 2014. The rise in finished imports amounted to 27%, with flat products rising 29% and long products 19% compared with 2014. Total exports fell by 9% in 2015 to 26.4 million tonnes. As a consequence of the accelerating rise in imports and sharp drop in exports, the EU became a net importer of steel in 2015, to the extent of 4.5 million tonnes. The impact on jobs and capacity of the crisis has been stark. In the second half of 2015 there were at least 7,000 further losses in the sector, bringing total EU steel employment down to 320,000. Time is rapidly running out for the EU to do what it takes to retain its global leadership in steel as a strategic sector. Once the steel industry is gone, the capital base disappears and the skills and know-how of European workers – built up over two hundred years – evaporates. European steel’s decline threatens all of the value chains that derive from it, including European automotive, European construction and European energy. EU trade policy must become more reactive and effective, forcefully tackling distortions by third- market players. The finger is most often pointed at China, but dumping of steel is widespread and is undertaken by a number of our trade partners.

Saba Steel Dedicates %70 of its Production Capacity to 2-mm Sheets

A Year of Ongoing Challenges

An expert from Italy’s Danieli Company was on hand for a meeting in Isfahan with managers, heads of the

production technical offices and experts representing Mobarakeh Steel Company’s Steel Making, Hot Rolling, Cold Rolling, Metallurgy and Production Methods units to discuss different ways of manufacturing new products – in line with market conditions – needed by carmakers and used in oil and gas pipelines. According to the correspondent of

Steel Newsletter, a report on the quality of products in automotive giants (Iran Khodro and Saipa) and on the need for timely supply of

quality products was presented in the meeting. Later, the Danieli expert, who

has valuable work experience in companies in charge of designing special products, talked about new products used in the automotive industry, among them DP 600 (Dual-Phase), M5, IF AH55, and their production methods. He also explained the production process of oil and gas pipelines, especially those made of API steel. Afterwards, experts from the

Operations Unit of Mobarakeh Steel Company raised technical questions and further discussed the issues that came up in the meeting.

The rotary car dumper of the stacker and re-claimer unit at Saba Steel Complex is ready to become operational, said the operations manager of the steel- and iron-making plant at Mobarakeh Steel Company. The launch of the unit, with an annual

capacity of 4 million tons, will complete the transport chain at the storage yard, Mehrdad Abdolrahimzadeh said. Implementation of the agreement to

develop the rotary car dumper - worth around $17 million - will help save more than $4 million on an annual basis, he said. He noted that in line with efforts to

promote the culture of indigenization more than 83 percent of the equipment used in the project was made inside the country. The inauguration of the unit will not only result in replacement of the road transport of material with rail transport which is more economical, but it will help protect the environment. Abdolreza Motamedi, who oversees the

implementation of iron-making projects, said the main responsibility of the unit is to homogenize, mix and store as much as 2 million tons of pellets. The fact that Saba Steel Complex has a railway link with areas beyond its premises makes it possible to bring in the better part of the pellets it needs on board train cars. The cars which arrive in the facility are first weighed before being sent to be unloaded by a car dumper (Crescent Type) which rotates between 140° and 180°.

He further said a car indexer or a locomotive handles the movement of cars and places them by the rotary car dumper. When unloaded, the content of the cars is transferred through vibrating feeders and the conveyer belt to the storage yard. An empty car weighs around 30 tons. A four-axle railcar can carry some 90 tons of pellets, while a six-axle car holds around 120 tons. Two parks 450 m in length and 50 m in width are reserved for storage. A stacker with a capacity of 2,000 tons per hour and two scrapper re-claimers, each operating at 1,000 tons per hour, are operational in this area, he said. And Ali Tavira, an expert with the iron-making plant, said the project holds a number of advantages, among them: It makes optimal use of storage space and renders the mix more homogeneous; it cuts costs by eliminating machinery from the pellet storage process and prevents pellets from crumbling or turning into pellet fines which impair the quality of the sponge iron; it helps accurately weigh the input pellets; it reduces air pollution caused by dump truck traffic; it employs a magnetic system to pick up metals which are sometimes found among pellets and may damage the belt and other equipment; it samples and screens the input pellets; and it cuts overall costs. Ahmad Saeed-Bakhsh, a deputy director for projects, for his part, thanked all MSC staff and managers as well as the personnel of Tuka Steel Investment

Company and Mobarakeh Steel Engineering Company for their contribution to the project. e expressed hope completion of

the rail line to carry the pellets will soon lead to full implementation of the rotary car dumper project.

MSC & Italy’s Danieli Review Ways of Producing New Auto, Oil Industry Items

Rotary Car Dumper Ready for Operationsat Saba Steel Complex

From January to February 2016, Chinese crude steel output was 121 million tonnes –a decrease by 5.7% year-on-year, continuing the downturn in 2015. Owing to the execution of policies for steady growth and overcapacity elimination, positive market expectations, strong steel demand, small inventories and a significant growth in raw materials and fuel prices, steel prices in the Chinese market have climbed continuously at a rising rate. The CISA comprehensive steel price index was 84.66 points at the end of April – an increase by 50.67% over the level at the end of November 2015, which showed a monthly increase during five consecutive months. Chinese steel companies – especially medium- and small-scale companies – restarted production

in response to a recovery of the steel industry. From the Spring Festival in February up to the last ten days of April 2016, restarted production capacity was 56 million tonnes, and 28 million tonnes of capacity was proposed to reopen in May. In March 2016, Chinese crude steel output was 70.653 million tonnes – an increase by 2.9% year-on-year and a new historical high.Crude steel output in April was 69.42 million tonnes, an increase by 0.5% year-on-year, with daily production of 2.314 million tonnes increased by 1.5% month-on-month, another record high. This shows that overcapacity in the Chinese steel industry has not yet been removed effectively and that oversupply of steel has not been changed.

Outlook for Chinese Steel Production

National National

5-Month Crude Steel Output Exceeds 7.5m TonsIranian steel mills produced over

7.5 million tons of crude steel during the first five months of the current Iranian year (started March 20), registering a 5.3% increase compared with last year’s corresponding period, Iranian Mines and Mining Industries Development and Renovation Organization reported on its website.Iran’s largest steelmaker Mobarakeh

Steel Company accounted for 2.2 million of the overall figure, Khuzestan Steel Company for 1.4 million tons, Esfahan Steel Company 1.04 million tons, Hormozgan Steel Company 438,000 tons, Saba Steel Complex 289,000 tons, Khorasan Steel Company 242,000 tons, Iran Alloy Steel Company 154,000 tons and Iran National Steel Industrial Group 22,161 tons.Moreover, the companies produced

more than 6.7 million tons of steel products, including beams, coils, rebars, galvanized auto sheets, cold-rolled sheets and pipes, during the same period, registering a 1.6% drop year-on-year.Crude steel production registered a

14.5% rise in the fifth Iranian month of Mordad (July 22-Aug. 21), as the eight steel mills produced more than 1.5

million tons. However, steel product manufacture for the month declined 2.7% with the steel plants’ output standing at over 1.3 million tons.The five-month period also witnessed

the export of 2.95 million tons of steel and steel products worth $1.29 billion in total, which indicates a 62% and 17% growth in weight and value respectively.

MSC’s Capacity Expansion PlanMobarakeh Steel Company’s

Managing Director Bahram Sobhani announced on Sunday that the company plans to add 1.8 million tons to its crude steelmaking capacity in the upcoming Iranian month of Mehr (Sept. 22-Oct. 22), which would bring MSC’s total production capacity to 7.2 million tons, Securities and Exchange

News Agency reported.He also announced plans to boost

its subsidiary company, Saba Steel Complex’s crude steel manufacturing capacity from the current 750,000 tons per year to 1.6 million tons by the end of the current Iranian year (March 20, 2017).According to the official, capacity

expansions are meant to help the

industry reach the goals set in the 20-Year Vision Plan (2005-25), which stipulates an annual production of 55 million tons of crude steel by 2025.MSC accounts for about 60% of Iran’s

steel sheet deliveries, with its main plant near Isfahan Province plus two steel-producing subsidiaries, Hormozgan and Saba steel complexes located in southern Iran. source:Metal Bulletin

STEEL NEWSLETTER

NEWS

www.msc.ir Aug/sept. 2016 No. 13

04

Tin has been one of the strongest base metals this year to the time of writing, and has been extremely resilient around $17,000/tonne, even as the other metals retreat. But we now see a growing likelihood that prices are overdue a correction lower. Demand is weak and largely immune to China’s infrastruc-ture spending boost that other metals have benefitted from. As a result, stocks have risen markedly on both the LME and SHFE, albeit from very low levels. In addition, given the $4,000/ tonne recovery in prices since the multi-year lows in January, we suspect that many of the cutbacks and stockpiling plans announced back then from China were put on hold. That said, more recent news out of Indonesia is potentially price-bullish as it seems that production and exports are on course to undershoot expectations this year. Overall, we are still bullish on tin, but feel that prices need to pull back to at least the low-$16,000s in the short-term before attempting to climb again in H2.

For zinc, as we noted last month, it is clear from TCs that the concentrate market has plunged deep into deficit. But the big issue for this metal is when and by how much that deficit will start to affect the refined market. We are no clearer on the scale of unreported stocks lurking off-market, nor on whether Chinese miners (the key swing producers) have ramped up production in response to favourably higher prices and lower TCs. What is clear from current data is that the refined zinc market remained oversupplied in Q1 and premiums are near four-year lows, neither of which is bullish. Demand is likely to have improved since then, especially in China given a pick-up in infrastructure spending, but until that is visible in a tighter zinc supply-demand balance, the uncertainty about whether the zinc bull story is moving forward will remain. This seems to have weighed on prices, as their advance stalled in May. Prices should advance again once this period of consolidation has passed.

The accelerated run-up in aluminium prices from mid-April to highs of $1,686/tonne did not sit comfortably with the fundamentals, so it is not surprising that prices pulled backin May. The low-to-mid-$1,500s feels like fairer value, given the stock and capacity overhang. There were attempts to rally in May, which showed that there was dip-buying interest, but rebounds were quick to attractselling and premiums are somewhat soft even though demand remains robust.One relative bright spot among aluminium’s otherwise generally bearish supply-side fundamen-tals is that Chinese exports are in decline. They fell 4.8% in April and were down 10.2% year-on year over January-April. That suggests higher prices in March-April may not have encouraged the scale of smelter restarts we had feared. However,we are still forecasting a substantial global surplus again this year – the eighth in the last nine years – and this will contin-ue to cap prices. That said, tight-ness around LME prime dates, given the presence of some large holders of nearby metal, may still trigger short-covering rallies.

TinCorrection Ahead of Second-Half Rally

Zinc

Bullish, but Cautiously so

Aluminium

Back Downto earth

Minister of Industries, Mines and Trade Mohammad Reza Nematzadeh and a number of his deputies along with

Managing Director of Mobarakeh Steel Company (MSC) Dr. Bahram Sobhani, MSC deputy director in charge of expansion projects Ahmad Saeedbakhsh, and Managing Director of Sangan Iron Core Company and provincial officials got a firsthand account of progress at MSC’s Pelletizing and Concentrate Plants in Sangan. According to the correspondent of

Steel Newsletter, during the daylong inspection tour of Sangan mines in Khorasan Razavi Province, the industry chief expressed pleasure over the progress of the projects in question and called for the inauguration of the Pelletizing Plant as soon as possible. “The justifiable investment of private investors like Mobarakeh Steel Company in Sangan mines is of great importance. Sangan has enormous resources and can play an effective role when it comes to employment and profitability. The presence of the private sector in these mines contributes to the economic boom as it draws further attention to the principles of the Resistance Economy.” The industry chief also thanked MSC for

what it has done in the [northeastern mining] region and said, “In fact, Mobarakeh Steel Company has earned the highest mark for its presence in this region. In light of the progress the project has made already, it is our hope that the Pelletizing Plant becomes operational soon.” He further urged local and provincial

officials to join hands to help investors in the region swiftly complete the projects they are running. “Inauguration of these projects contributes to production, knowledge and management growth in the region and these factors in turn create jobs.” Nematzadeh went on to say that

investors are still putting money into projects under way in the region and that finances should keep pouring into the region to make sure development projects do not grind to a halt here. “Although the steel and iron ore

industries have been in trouble over the past few years, what is promising is the fact that investment firms in Iran have forged ahead with these projects at a time when similar projects in some other countries have stalled.” Recalling the necessity of investor

involvement in social activities, the industry minister said although investors focus the better part of their attention on completion of their projects, attention to social issues, especially protection of the environment, should be among their priorities. As for infrastructure, plans have been

drawn up, he said, adding he has held meetings with fellow Cabinet ministers to take care of the facilities needed by such projects. “We hope the inauguration of the pelletizing plant is followed by completion of iron ore processing project so that overall productivity is given a boost.” The managing director of Mobarakeh

Steel Company, for his part, presented a progress report on MSC’s pelletizing and iron ore processing projects in Sangan and said, “In line with measures to implement the policies of the Resistance Economy and to stop the sales of raw materials, MSC has decided to launch concentrate, pelletizing, and iron ore processing plants to produce five million tons of iron concentrates and an additional five million tons of pellets on an annual basis.” He further said MSC’s pelletizing and

iron ore processing plants in Sangan sit on an expanse of land 500 hectares in area. “To make optimal use of the potential of local manufacturers and indigenize equipment, the better part of the equipment used in these plants has been bought from local manufacturers. Only items which are not produced locally have been purchased from foreign suppliers. Implementation of these two projects will create 1,000 direct and 5,000 indirect jobs.” As for hurdles standing in the way of

swift completion of these projects, he said Sangan does have the potential to turn into a mining hub of the nation. “This region’s rich resources have created a keen interest among investors

to put their money into projects here. But more attention should be paid to efforts to fix the infrastructural problems of the region to give investors extra impetus to work here. Supply of water, electricity and natural gas and transportation are among infrastructural issues which local and provincial officials need to pay more attention to in order to facilitate investment.” Later MSC deputy director in charge of

expansion projects Ahmad Saeedbakhsh recalled the measures the steel giant has taken to develop mining in Sangan and said iron ore reserves in the region are estimated at 1.2 billion tons. “The projects underway in Sangan, namely the construction of concentrate and pelletizing plants, are designed to produce 17.5 million tons of concentrates and 15 million tons of pellets.” “These privately-funded projects are

still in progress. In a bid to ensure the adequate and timely supply of its needs for raw material, Mobarakeh Steel Company decided to make investment in these mines. Although involvement in these projects required huge investment, the two projects MSC invested in overtook others which had a head start over ours. We owe this praiseworthy achievement to the efforts of our colleagues who played a part in these projects,” he said.

Saeedbakhsh described infrastructural issues as the biggest challenge faced by officials in charge of the Sangan projects and said, “To supply the water these projects need, a well with a discharge of 30 cubic meters per second has been dug. When its pumps are boosted to discharge 30 cubic meters of water per second, the problem of water supply will be partly solved. As for electricity supply, thanks to close ties between MSC and Opal Investment Group, the latter has agreed to provide the electricity these projects need.” To make the MSC projects in Sangan

operational, some 110 MW of electricity, 432 cubic meters of water per hour and around 16,000 Nm3 of natural gas are needed, he said, adding local and provincial officials need to join forces to ensure sufficient supply of water, electricity and gas. He went on to say another issue

that needs more attention is the rail transport. “In light of the fact that a single-track railway system is operational in this region, officials need to roll up their sleeves and do something before completion of more projects turns the insufficient railway transport into a major challenge.” Saeedbakhsh described water

conservation and recycling as necessary and added since the region has a dry

climate, tapping into groundwater reserves takes on added importance. “At the beginning of the project, in line with the overall MSC policy of making optimal use of water in industry, we floated the idea – in talks with Mashhad local officials – of making use of urban wastewater. Later as the impact of drought in the country, including in Mashhad, began to kick in, Mashhad municipal officials lost their interest in the project.” And Mir-Mohammadi, the managing

director of Sangan Iron Core Company, said operations to install equipment at the Pelletizing Plant and make it operational on an experimental basis will have been completed by October 21. He said inauguration of the project which is designed to supply raw materials to MSC will partly meet the needs of the steel giant. He said the project involving the

pelletizing plant which is in the form of EPC (engineering, procurement and construction) has drawn 2.3 trillion rials (almost $77 million) and an additional €100 million and the concentrate plant which is in the form of engineering and construction has drawn 3.6 trillion rials ($120 million) and an additional €140 million. The first one is more than 85 percent complete and the second has made around 27 percent physical progress, he concluded.

According to the report of public relations of IMIDRO, So far, we are increasing production capacity of pellets and iron ore concentrates to 15 and 17 million tonnes respectively in Sangan zone. These two plans will add 10 million tonnes to pellet production capacity of the country, Mehdi Karbasian said.In line with objectives of Resistance Economy’s policies,

inauguration of pelletizing and iron ore concentrates will lead to balance of steel chain industry by March2017, he added.Each unit of mineral products will create at least 3 times

added value, although IMIDRO plans to increase further added value in rare earth elements sector, Karbasian continued.He mentioned negotiations with reputable international

companies for investment in mine and mining industries projects in post sanctions era and said: “regarding signed memorandums of understanding, foreign investment attraction and new technology transfer are very important factors for us. So, we announced in our

negotiations with international firms that partnership with Iranian companies in private sector in order to technology transfer is our main priority”.Before sanctions, foreign countries had little interest to

negotiate with Iran for investment but now major world insurance companies such as SACE, Coface, Hermes, etc., are willing to guarantee financing projects.

According to the report of public relations of IMIDRO, export value of mineral and mining industries products passed $2.9 billion, whereas import value of these products reached $1.4 billion in the first five months of the last Iranian year.Moreover, export value of mineral and mining industries

products in the first five months of current year increased to $2.3 billion which compared to the corresponding period of the last year shows 23 percent growth.During this period, growth of mineral exports were as

follows: steel chain 62 percent, copper 471 percent, zinc 24 percent, lead 45 percent, molybdenum 147 percent, chrome 18 percent and mica 861 percent. Also value of steel chain export rose to $1 billion and 293

million and copper 422 million.

26 percent import reductionIn the first five months of the current year import

value of mineral and mining industries products with 26 percent decline reduced to 1.4 billion meanwhile during the same period of the last year was $1.9 billion.

As part of measures to meet production line demands for equipment and spare parts, the pump engines of the Cycle C water supply system at Mobarakeh Steel Company’s Steelmaking Plant have been indigenized, said Amir-Reza Naghsh, an expert with the plant’s maintenance and repairs unit. The decision to tap local potential to develop the pump engines came after the unit that supplies water to the electric arc furnaces announced it needed 200 kw pumps (6.6 kV), the expert said. He went on to say the cooling ducts of the electric arc furnaces are the primary responsibility of the unit. Each module of the Steelmaking Plant employs an independent cycle to cool the four ducts of the arc furnaces. Disruption in any one cycle and a subsequent decline in water pressure will increase temperatures at cooling ducts which in turn makes a simultaneous halt to operations at all four arcs more likely. That lends extra importance to Cycle C in production and in the supply of spare parts such as pump engines. He further said first the technical office of the Steelmaking Plant was informed of the need for such engines. In light of the fact that the location of the pump engine is special and its box and clamp board are specially designed, reverse engineering and creating a scale map was necessary. Experts with the repair shop of the Steelmaking Plant provided the maps needed for production of the pump engines to officials of the company which signed a deal to develop the engines. After the company built and handed over the engine, it was installed for a test run during which all electrical and mechanical parameters – of operations in nominal conditions – were examined by the experts of the repairs and technical office, he concluded. And Gholamabbas Karimi, an expert who oversees purchases of spare parts from foreign suppliers, said in line with the policy to support local production and implement the principles of the Resistance Economy, the Steelmaking Plant approached local producers

of such engines. “Eventually Jamco was awarded the contract to build the engine. Following extensive consultations between this company and the technical office of the Steelmaking Plant about production parameters, the engine was developed and tested at a site that belonged to the contracting company before it was eventually installed and became operational at Mobarakeh Steel Company.” The locally-manufactured engine has helped MSC save up to 40 percent in purchasing costs, he said, adding, on top of that local technical knowhow has been brought to bear. In conclusion, he thanked members of staff at the technical office of the Steelmaking Plant, its repairs and operations unit, Jamco and Poya Generation companies and the Procurement Management unit for their contribution to the successful implementation of this project.

Sangan Pelletizing Plant Close to Completion

Inauguration of Two Pelletizing Plans by 2017

Mining Chain Export Up 23%

MSC Steelmaking Plant’s Water Supply Pump Engine Indigenized

National

Having had to cope with political and economic problems, falling global steel prices, instability in the Middle East and North Africa, as well as Chinese export growth last year, markets for Turkish steel have had a comparatively better start in 2016, report Serife Durmus and Cem Turken

With over 9 million tpy of liquid steel production capacity, Erdemir Group is Turkey’s biggest steel producer. The Erdemir Group has two steel plants, one in northern Turkey (Erdemir) and one in the southern part of the country (İsdemir). It announced earnings before interest, taxes, depreciation and amortisation (Ebitda) of TRY365.79 million (about $125million) for the first three months of 2016. The group plans to produce 9 million tonnes of steel in 2016, of which 7.20 million tonnes will beflat products and 1.80 million tonnes will be long products. It produced 9 million tonnes In 2015, of which 7.40 million tonnes were flat products and 1.60 million tonnes were long. Sales were 8.80 million tonnes in 2015, with flat products accounting for 7.20 million tonnes and long 1.60million tonnes. The company plans to spend $461 million on investments throughout 2016. Total investments in 2015 amounted to $201.11 million.

Turning Pointfor Turkish Steel?

Largest Producerin Brief

source:Metal Bulletin

NEWS

STEEL NEWSLETTERwww.msc.ir Aug/sept. 2016 No. 13

07

Turkish Steel Exports OutlookArcelorMittal to Close HBI Plant

Automotive

ArcelorMittal is to permanently shutter its Trinidad & Tobago HBI operations. The plant at Point Lisas, with a capacity of 550,000 tpy, has been idle since

November, when nearly 500 workers were temporarily laid off. ArcelorMittal Point Lisas blamed increases in the prices of natural gas and energy,

port rental fees and new tax nnouncements at a time of falling commodity prices for its inability to remain internationally competitive: it recorded a net loss of $281 million in 2015, and has been recording net losses since 2009.

Turkish steel exports are expected to rise slightly in 2016, according to İB. “Our aim for 2016 is toincrease our production and export figures as well as making the industry more competitive. We are aiming to increase our exports by 2%, to 16.4 million tonnes, in 2016. However, the economic and political problems that started in 2015 still continue, so 2016 will also be a tough year,” Ekinci said. “We hope the industry will recover in the last quarter of 2016,” he added.

National

News in Brief

The Geneva minister of economy and security and his entourage who paid a visit to the premises of Mobarakeh Steel Company (MSC) in late April to get familiar with the capabilities of the Middle East’s giant steelmaker have in a letter praised MSC for its hospitality and cooperation. The following is what Pierre Maudet has

written in his letter to the managing director of Mobarakeh Steel Company: I would like to express my deep gratitude

to you and other people [at Mobarakeh Steel Company] who warmly welcomed members of Geneva’s economic delegation on April 29. Our tour of inspection of the production

lines at the [MSC] plant was quite useful. This inspection together with our visit to the beautiful city of Isfahan was the climax of our trip to Isfahan. Your presence and the answers you

provided to the questions we raised considerably helped us develop a better understanding of the great dynamism of Iran’s steel industry and review the existing potential in establishing trade ties between Geneva and Isfahan. Members of our delegation were able to collect valuable information on and develop a better insight into your company and the role it plays in the steel market. I look forward to meeting you soon, and I

wish you success in your current endeavors. On behalf of the members of Geneva

delegation, I would like to voice my sincere gratitude for your generous hospitality and the programs you organized for us.

Yours Sincerely, Pierre MaudetGeneva Minister of Economy and Security

An economic delegation from the German state of Thuringia, headed by Wolfgang Tiefensee, the Thuringian Minister for Economic Affairs, Science and Digital Society, paid a visit to Mobarakeh Steel Company (MSC) on May 19 to get a firsthand account of production lines at the Iranian company and learn about the potential of the Middle East’s largest steelmaker. Later in an exclusive interview with the

correspondent of Steel Newsletter, Wolfgang Tiefensee said the 40-member team of tradesmen and economic players from Thuringia was really impressed by steel production at MSC which employs fully automated devices and state-of-the-art technologies. He described steelmaking as a fundamental

industry and said the steel industry which is the backbone of a country has a major impact on national economies, adding a country with a strong backbone will make remarkable progress. The German minister pointed to his

meeting with Dr. Bahram Sobhani, the managing director of Mobarakeh Steel Company, and said, “Following Iran’s agreement with the international community [the nuclear deal Iran signed with world powers in 2015], Iran has entered a new era in which mutual respect, transparent dialogue and the will to establish more cooperation are given prominence”. Thanks to this approach, Iran can reclaim

its [past] position in the international community, he said, adding his country is willing to have further bilateral cooperation with Iran [in general] and Mobarakeh Steel Company [in particular]. During the German delegation’s visit

in which a host of senior managers and deputies of MSC were present, Dr. Sobhani talked about the conditions of the steel industry in Iran and the world, offered a detailed report on the production process in Mobarakeh Steel Company and introduced the subsidiaries of MSC.

German Economic Team Urges Cooperation with Mobarakeh Steel Company

Sobhani:

MSC should manage its coststo ensure profitability

Mobarakeh Steel Company (MSC) hosted the first managerial meeting of the Iranian Mines and Mining Industries Development and Renovation

Organization (IMIDRO) which focused on “the plans and outlook of mines and mining industries in the Resistance Economy” in the year to March 20, 2017.In the gathering, the head of IMIDRO’s board of

directors mapped out the plans and the outlook of mines and mining industries in the Resistance Economy, and managing directors of companies which are in charge of IMIDRO’s projects laid out the objectives and plans of their agencies for the year. According to the correspondent of Steel

Newsletter, Managing Director of Mobarakeh Steel Company Dr. Bahram Sobhani told the gathering Mobarakeh Steel Company is the largest producer of flat steel plates in the Middle East and North Africa, adding MSC – which accounts for more than 50 percent of such sheets produced in the country and for around 22 percent in the Middle East and North Africa – has successfully met a main portion of demands at home and abroad.He further said Mobarakeh Steel with an annual

production capacity of over 11 million tons is the world’s largest producer of sponge iron. “The company’s stock market value stands at around $6.7 billion. MSC, the largest company on the stock exchange, has claimed a 1 percent share of the country’s Gross Domestic Product (GDP) and a 5 percent share of the Gross National Product (GNP) in the industry sector”. Dr. Sobhani went on to say MSC is the only

steelmaker which is active in operations ranging from iron ore processing to the rollout of end product. “This industrial institution has recently undertaken various, important activities thanks to the wholehearted contribution of its staff, chief among them: development of a product basket to meet the demands of carmakers, the oil and gas industries in sweet and sour environments, implementation of development projects by building and inaugurating steelmaking plants such as Hormozgan Steel Company, Sefid Dasht Steel Complex, etc., increasing the [output] capacity of Mobarakeh Steel Group following the conclusion of three deals during President Rouhani’s trip to Rome, including the development of Hormozgan Steel Company, Sefid Dasht Steel Complex and a second Hot Rolling line. Mobarakeh Steel Company has produced and sold

about 10 million tons of special steel products over the past ten years, he said, adding conclusion of cooperation deals with Khouzestan Oxin Steel Co. and production of special plates saw the country cut its dependence on foreign-made plates for the oil and gas industries. “Besides, the production of ribbed and wrinkle color sheets has put the company on course to making products with higher added value.” MSC has earned significant revenues from the

sales of its products since 2003, he said, adding the company’s revenue was at its peak in the 12 months to March 2015 (over $ 3b). “In the year to March 2016, the company suffered a 19 percent drop in its sales due to recession in domestic markets and slumping global prices. The prices of steel sheets posted a 60 percent decrease and declined to $260 from $550 on global markets, and in Iran we experienced lower prices and consequently a plunge in revenues because of the inflow of steel products. Ironically, it came as our expenses increased [in that period].” The managing director of the steel giant also

said, “Since inauguration, the company has sold 70 million tons of its products in domestic markets and exported 16 million tons to overseas markets, collecting more than $ 35 billion in revenues. The company’s exports of around 16 million tons of steel products have brought in more than $6.5 billion, with Mobarakeh Steel brand establishing a foothold in global markets.Sobhani pointed to accusations that Mobarakeh

Steel Company’s is partly to blame for the Zayandehrood River to dry up and said that MSC has withdrawn 29 million cubic meters of water from the Zayandehrood River, about one percent of the river’s catchment basin. The fact is that the water Mobarakeh Steel uses amounts to 0.03 percent of water harvesting in the country and 16 percent of water consumption of domestic steelmakers. This comes as Mobarakeh Steel Company has a 50 percent or so share of steel production in Iran.He then said the measures his company has

taken have led to a 68 percent decrease in water consumption, compared with initial designs, for each ton of steel produced. “It means the company has decreased its water consumption from 16.6 cubic meters per ton to 5.33 cubic meters per ton. The figure in Tata Steel [an Indian multinational steel-making company headquartered in Mumbai] stands at 6 cubic meters per ton.“The company has reduced its water

consumption as its production has grown over the past 25 years. The company re-uses the water which is consumed during the production process”. As for the Resistance Economy, the MSC chief

said Mobarakeh Steel Company was designed and inaugurated by European companies. “A group in charge of indigenization and reverse engineering was formed at MSC to supply spare parts and the pieces used in the company. The group was tasked with reviewing all information and maps of spare parts and consumable parts and providing the domestic producers with the results of its review.“On the back of such measures and thanks

to diligent endeavors of MSC staff, efforts to indigenize and tap into the potential of domestic producers have gained momentum since 2011. Four years later, the company bought more than 82 percent of the parts it needed from domestic producers. We owe this achievement to the [valuable] experience of managers in the country and tireless efforts by the producers. From 2002 to 2015, the indigenization of spare parts and equipment helped the company save more than $65 million in foreign currency, cumulatively”. The MSC managing director described the

challenges facing Mobarakeh Steel Company as enormous and said Mobarakeh Steel Company has always highlighted efforts to utilize and make optimal use of resources, but this industrial institution is facing challenges which make it hard for the company to achieve its stated objectives.He said challenges such as supplying different

forms of energy, including water, gas and electricity, provision of iron ore and pellets for domestic use, and supplying cheap finances to carry out development projects, as well as limited rail, road, and sea transport infrastructure and piers impose staggering costs on domestic steelmakers (about $100 million) and make it hard for the steelmakers to walk down the path of development [and progress]. Dr. Sobhani characterized as important the

process of improving the efficiency of human resources to keep pace with international rivals

– those who are viewed as role models – and said [production of] 1,050 tons of steel per person is the international gold standard for efficiency, whereas in Mobarakeh Steel Company the figure is 385 tons per person. He expressed hope that implementation

of development projects and an increase in production capacity can help MSC overcome the challenge created by inflated human resources and take steps toward matching up to international standards. Director of the Iranian Mines and Mining

Industries Development and Renovation Organization (IMIDRO) Dr. Mehdi Karbasian told the same gathering that in a Resistance Economy, export-oriented production is a top strategy of the mining industry. Dr. Karbasian, who also serves as deputy minister

of industries, mines and trade, further said if the steel industry had not exported more than 4.2 million tons of various products last year [the 12 months to March 20, 2016] it would have gotten into serious trouble. “It came at a time when global steel prices declined by more than 50 percent.” He further said that mines and the mining

industry were in deep crisis last year which is still plaguing the steel industry. “As a result of global problems, many Iranian plants operate at 50 percent of their nominal capacity. But Iran’s export-centered approach in the steel industry which covers a vast chain of products helped it overcome many of these challenges.” Mines and the mining industry which play an

important role in the Resistance Economy have to fulfill their responsibility to prop up the national economy, the IMIDRO chief said, adding last year his organization faced a budget deficit of around $330 million but the weekly monitoring by the Liquidity Committee of IMIDRO not only helped the organization tide it over but infused cash into projects and kept them afloat. “As a result, the progress of none of our projects slowed down, nor did any of them grind to a halt.” Interestingly, projects gained momentum and financial woes did nothing to bring them to a halt, Dr. Karbasian said. Despite shortcomings, IMIDRO was very successful and posted considerable progress over 2013 and its subsidiaries took a shot at

modernization. He went on to say with international sanctions

in place, last year was a difficult one, not only for the industry, but for the entire country. Karbasian said the Joint Comprehensive Plan

of Action [the nuclear deal Iran struck with world powers in 2015] injected dynamism into projects and secured a flow of cash. “Prior to the conclusion of the [nuclear] deal, well-known foreign firms did not even bother to respond to the demands of the Iranian side. Afterwards, though, they extended a cooperative hand toward Iran the result of which was the finalization of investment and cooperation agreements with world-class companies.” He credited the support of the public and

the Supreme Leader as well as the endeavors of the government for this achievement. “In a third Europe-Iran Forum in Zurich, Switzerland, European banks signaled their readiness to finance Iranian projects. Those ties are bound to deepen in the future.” As for the performance of the Iranian

Mines and Mining Industries Development and Renovation Organization last year, the deputy trade minister said expansion of mining exploration contributes a lot to the mining industry in keeping with the provisions of the Resistance Economy. “Cooperation between the mining sector and the Atomic Energy Organization of Iran, unprecedented in four decades, did happen last year. Such cooperation resulted in the discovery of six rare soil elements in central Iran.” Last year also saw the volume of the capital

of an insurance fund for mining activities increase 11-fold to about $37 million. “One of the roles of this insurance fund is to support small- and medium-sized mining firms in line with what is required by the Resistance Economy.” “This year [ends March 20, 2017], on top of

exploration, provincial steel projects will come on stream. Plans are in the works to inaugurate plants which turn out titanium concentrate and slag –projects which date back to decades ago. The overall value of the projects to be inaugurated this year stands at more than $680 million,” he concluded.

MSC, World’s Largest Sponge Iron Producer

The inauguration of the briquetting unit of the direct-reduction iron mega modules at Shahid Kharrazi Plant of Mobarakeh Steel Company has resulted in the completion of the production and recycling of DRI fines at the Iron Making Unit. Mehrdad Abdolrahimzadeh, who is in charge of implementing projects at the Iron Making and Steel Making Units, said the briquetting unit which has absorbed more than $12 million in finances is capable of producing 60 tons of products per hour, adding the newly inaugurated unit helps MSC save over $33 million in hard currency each year and has resulted in the direct employment of a dozen people. He further said the plant has major equipment such as DRI fine tanks, lime

and glue, material handling, dust collector, two roller press machines, screen, mixer, stacker, chain conveyor, server and automation systems. He described the following as the advantages

of the project: promoting the culture of indigenization by tapping into domestic potential to build more than 78 percent of the equipment at home; collecting fines and dusts stemming from sponge iron production to be later turned into briquettes which are used in steel melting furnaces; preventing environmental pollution that results from the spread of fines and dust in the company; and reducing the cost price of sponge iron. For his part, Abdolreza Motamedi, the head

of Iron-making Expansion Projects, said, “In this process the fines from sponge iron are separated through screening. The fines, below five mm in dimensions, are transferred to the Product Fines Bin where fines and lime are channeled into a mixer through the steel conveyor belt. At the same time, sodium silicate is pumped into the mixer. After being mixed and homogenized, the materials are taken by the chain conveyor to roller press machines in a controlled fashion. “Later, these materials are put between two

rollers under 3720 KN of pressure. Finally, the end product – briquette – is either stockpiled after being screened by conveyor and stacker machines, or is transferred by the steel

conveyor belt to steel melting furnaces.”Motamedi went on to say the project has many

advantages, among them: it recycles water – which is revived through clarifiers and sent to the production cycle – to be used by cooling and dust collecting systems at the plant. In conclusion, he thanked the IRITEC

(Iran International Engineering Company) which implemented the EPC [Engineering, Procurement, and Construction] project, the engineering section at the plant which oversaw the project, the management at Iron Making Unit and the personnel of DRI-II, Technical Safety and Fire Department, and Development Contracts departments who contributed to the implementation of the briquetting project.

MSC Launched New Briquetting Plant

The Geneva Ministerof Economy and Security Hails Hospitality of Mobarakeh Steel Co

STEEL NEWSLETTER

NEWS

www.msc.ir Aug/sept. 2016 No. 13

06

Berlin, Germany is now home to an Iran-Europe Economic Cooperation Center. Visiting Iranian Minister of Industries, Mines and Trade

Mohammad Reza Nematzadeh and a host of Iranian and German businesspeople were on hand for the inauguration of the center.Speaking in the opening session, the

Iranian trade chief recalled the long history of Iran-Germany cooperation and said the center can bring firms and businesspeople from the two countries close together. He further said prior to the imposition

of “crazy sanctions” the volume of Iran-Germany trade was in the neighborhood of $7-$8 billion and that the conclusion of the nuclear deal between Tehran and world powers can see the amount of bilateral trade return to pre-sanctions levels. At the inaugural attended by more than

100 businesspeople from both sides, the Iranian minister said there are no limits for trade transactions with Iran, and the companies which were once hesitant to do business have realized that the two sides can easily forge fresh cooperation.

Nematzadeh went on to say that several trade delegations have visited Iran [following the conclusion of the nuclear deal]. “We can launch cooperation in various industrial fields and turn into strategic trading partners for each other.”

The Iranian industry minister described the Iran-P5+1 nuclear deal as a win-win agreement and said we can launch a new round of Iran-West cooperation, particularly with Germany. “After years of talks as part of nuclear negotiations

between Iran and P5+1 [five permanent members of the UN Security Council plus Germany] major industrialized powers realized that Iran acts in good faith.” He said, “I hope this Economic

Cooperation Center can bring firms from

both sides together. We are facing no political restrictions. Some European firms and banks which were initially hesitant to do business with Iran have now realized that there is no hindrance and the two sides can easily cooperate with each other.” On average, two or three trade

delegations from around the world visit Iran each week, he said adding the two sides can work together in areas such as developing machinery, banking and economic fields. “It is time to launch the kind of

cooperation in which we view each other as long-term strategic partners. Iran can serve as a hub for European trade cooperation in the region,” Nematzadeh said. Mehdi Karbasian, the director of the Iranian Mines and Mining Industries Development and Renovation (IMIDRO), Mohsen Salehnia, deputy trade minister for industries, Dr. Bahram Sobhani, the managing director of Mobarakeh Steel Company, and Majid Pour-Attar, the managing director of Iranian Aluminum Company accompanied the minister on his Berlin visit.

The steel industry in Latin America (LA), as well as the global industry, is in crisis. As long as the current overcapacity is maintained, particularly the one in China, steel market conditions will be weak and production and financial difficulties and unemployment will continue. With falling commodities prices, slowdown in China´s growth and weak global demand, LA has once again revealed its vulnerability to global slowdown. In this scenario, the steel industry in LA faces six challenges. The first challenge is how to recover the economic growth path? In the last IMF report, LA’s economic outlook in 2016 showed a negative rate of -0.5%, for a second year in a row. However, there are differences within the region; countries such as Mexico, Chile, Colombia and Peru have a positive performance and countries like Brazil, Argentina and Venezuela are in a recession. The cost of rebalancing the economies is high and the fiscal and monetary stimulus capacity islimited. Given that steel demand is a reflection of economic performance, the outlook is not bright. The second challenge is how to reverse the decline of manufacturing on countries’ GDP, since manufacturing is a key part of the steel value chain. In the case of Brazil, manufacturing went from 17% of GDP in 2013 to 11% in 2014; Argentina went from 24% in 2003 to 17% in 2014; and Colombia from 15% in 2003 to 13% in 2014. If manufacturing weakened in major LA countries there will be a negative medium- and long-term effect on steel demand. The main economic task for the region is to set up the foundations for a growth model less dependent on commodities and more in the industrial activities. The third challenge is to ensure a level playing field in the steel market. In the global steel industry there are two models of development: one where private companies compete in market condi-tions, and another where companies operate under the guidelines of the government and receive all kinds of subsidies. The governments must ensure that subsidies are not granted in the global industry, and trade is guided by the WTO’s rules. The fourth challenge is how to deal with unfair trade imports, particularly those coming from China. In 2015, China exported to the world 112 million tons and 9.4 million tons came to LA. Its participation in LA’s demand rose from 6% in 2011 to 14% in 2015. In LA, there are 37 unfair trade investigations against China and 12 more on-going investigations. The fifth challenge is what is happening in China and its steel industry. The list of industry problems in the country is growing (including reduction of overcapacity, company debt problems, the need to export and others) and the end-result is not clear. The last challenge is for Latin American steel companies to continue upgrading their facilities with leading edge technology, improving productivity, increasing the value added in products and strengthen human resources skills. The aim is to achieve “world-class status”. Rafael Rubio, Alacero, Chile

Challenges of the Latin American Steel Industry Outlook for Chinese Steel Production

AutomotiveAutomotive is one of the biggest steel consuming sectors for

Turkey’s steelmakers, and as it exports most of its output to Europe, production increased in 2015 thanks to strong demand in export markets. Automotive producers in the country are also looking for new locations to increase production. Turkey produced 1,358,796 vehicles in 2015 – up by 16% fromthe 1,170,445 vehicles made in 2014. The country’s vehicle exports increased by 12% to 992,335 vehicles, compared with 885,180 vehicles shipped out of the country in 2014, according to the Turkish Automotive Manufacturers’ Association (OSD).

National

Given that the old control system of the light shearing line at the Cold Rolling Plant – an old PLC-based Westinghouse model – dated back decades and controlled no more than 1,400 input and output feeds, authorities decided that the replacement of the system was necessary, said Reza Dorahaki, an expert with the plant’s process control unit. He further said the old system caused a lot of

problems because it lacked HMI and thus did not have access to online data on the conditions of equipment. “To replace the old system, the new designs focused on a PLC7-based Siemens system which employed a remote I/O to collect signals and ensure CPU connectivity. A Siemens S7-414 PLC and five industrial computers featuring four HMIs and one ES were envisioned for the project.” The new system employs a new edition of

Siemens’ STEP7 and WinCC software, he said, adding it also uses an independent industrial Ethernet for links between PLC and HMI. What is remarkable about the project is its use of a marshalling box which eliminates the need for extra cables in the electrical room. Meanwhile, Jamshid Zolfagharbeik, an

electricity and automation expert at MSC, said the new system which employs state-of-the-art technology for control and monitoring in

line with modern standards has a number of advantages, among them, compatibility with Siemens SIMATIC technology, links between simple networks and modern control systems, creation of a comprehensive monitoring system with the capability of receiving reports, alarm management, changes in parameters and speedy detection of faults and pinpointing their exact location. He went on to say that in the new system

monitoring is comprehensive, and graphics display the condition of the control system and the equipment it controls. And to ensure a steady supply of electricity to the PLC and HMIs in cases of emergency or when light is out, a UPS (KVA 15) has been used. Shabib Ghasemi, another MSC electricity and

automation expert, said as part of the project all old encoders have been replaced with new, more accurate TK50 models and the removal of the old system and installation of the new one was done during a five-day shutdown. In conclusion, he thanked the manager of the Cold Rolling Plant, the staff of the costed products unit, the head of the final lines and the technical repair units, the head and staff at the repairs unit and the Cold Rolling Project Management unit and staff of Foolad Technic Co. for their contribution to the project.

Investment and expansion play a direct role in the adequate supply of raw materials to downstream industries, in production of items with higher added value and in higher dividend for shareholders, Managing Director of Mobarakeh Steel Company (MSC) Bahram Sobhani told members of the steelmaker’s management committee. According to the correspondent of Steel

Newsletter, in his speech the MSC chief recalled the importance of indigenization in different sectors of the steel giant and said in indigenized production of spare parts and equipment it is imperative to improve the quality of locally manufactured products to make sure they do not affect quality production in the company. He described investment in the production of new

items and inauguration of new projects as crucial to expansion and to maximization of efficiency. For instance, with the launch of a railway tracks line at MSC, provision of raw material has become a top priority which can be addressed through investment in new plants. The MSC chief went on to say short- and long-term

plans should be worked out to settle the problems different plants are faced with. Sobhani underlined the need for new production

capacities as well as for development of infrastructure such as transportation. He said constant contribution to Sangan Project

should be placed on the agenda of the Steelmaking Plant in order for the contractor of the sensitive project to pursue it more attentively. “In other words, things should go ahead in a way that there remains no problem when the project becomes operational.” The managing director of the steelmaker further

said reports released by the MSC economic and financial department on investment, sales and exports mirror the commercial performance of Mobarakeh Steel Company which is trying to present itself as efficiently as possible and convey a maximum sense of hope and confidence to

investors and shareholders alike. “Obviously, such reports have to be as accurate and transparent as possible.” Sobhani, who also serves as chairman of the

Iranian Steel Producers Association, further said the steel industry is in crisis, adding “At a time when foreign and local markets are going through a critical period, MSC should manage its costs to ensure profitability. Thanks to accurate, detailed planning to supply raw materials for downstream industries, we were able to meet the needs of our customers. The measures taken at Saba Steel Complex to roll out thin sheets helped supply what was needed by those in the market for thin sheets.” He said efforts to raise HR productivity and

train efficient production line staff are of great importance, urging the training unit of the giant steelmaker to give top priority to training production line staff just as it did in the run-up to the inauguration of MSC. Sobhani said tardiness in business should be

avoided and in drawing up recruitment plans, attention should be paid to higher productivity. “We have no plans to hand over the main production lines to contractors in new projects.”He described procurement management as a

pillar of production with high added value, saying more efficient procurement strategies in line with costs and timing are needed.The MSC managing director stated when there is a

warehouse overload, the likelihood of waste rises, so do the costs of warehousing. “In other words, unnecessary purchases push up the overall costs of an economic institution.” He thanked all MSC staff members for their role

in introducing “perfect changes” to the IT system. “It was a tough and sensitive job but was superbly handled. Everyone involved should act with maximum accuracy and cooperativeness.” In conclusion, he expressed gratitude to all MSC

managers and staff for helping realize the goals set for the steelmaker earlier in the year.

Control System at Light Shearing Line of MSC Cold Rolling Plant Replaced

Sobhani:

MSC should manage its coststo ensure profitability

Prices DropTurkish rebar prices fell continuously in 2015, in line with falling global steel

and raw materials prices. Metal Bulletin’s sister publication, Steel First’s price assessment for rebar exports from Turkey was $496 per tonne fob in January 2015, touching to $439 per tonne in June, but then reaching $335 per tonne in December last year. The main reason behind the falling prices was mostly Chinese billet suppliers lowering their export offers to historically low levels. In January 2015, billet offers from the CIS region stood at around $400-420 per tonne cfr, when China came into the market and offered billet to Turkish buyers at $375 per tonne cfr for March shipment. The trend continued, with Chinese offers coming down to $325-335 per tonne cfr in June last year, forcing CIS suppliers to offer billet at around $360-370 per tonne cfr Turkey.

source:Metal Bulletin

Iran-Europe Economic CooperationCenter Opens in Berlin

NEWS

STEEL NEWSLETTERwww.msc.ir Aug/sept. 2016 No. 13

09

LONG PRODUCTSCall for Action

Investors from Algeria and the UAE are funding a rebar plant at Relizane, Algeria. Algerian private group Bellazoug, which specialises in construction, building material importation and tourism, and UAE construction material trader Bidewi Group, will be the shareholders, Bellazoug owing 51% and Bidewi 49%. The plant will have a capacity of 600,000 tpy in 18 months’ time. A second stage will add a foundry and electric arc furnace with 1 million tpy capacity, to be completed in three years’ time. The total investment is $300 million.Hyundai to add 500,000 tpy to galvanizing

capacityHyundai Steel is to build a new continuous

galvanizing line (CGL) in South Korea to cope with increasing demand for high-strength steel products for the automotive sector. The 500,000 tpy line will be installed at the Suncheon works, which it inherited from Hyundai Hysco after last year’s merger. The line is expected to cost 170 billion Won ($148 million) and become operational in January 2018. Itwill be the third CGL at Suncheon. Hyundai Steel will also invest in its forging mill in Suncheon to expand the range of steel products it can offer to manufacturers of aeroplanes, engines and power generators, among others.Brazilian prosecutors file action against

Samarco, Vale, BHP Billiton State prosecutors in Brazil’s Minas Gerais state

(MPMG) have filed a public civil action against Samarco and its shareholders, Vale and BHP Billiton, over the Fundo tailings dam collapse last November. MPMG is seeking 155 billion Reais ($44.75 billion) in relation to environmental,

social and economic damages, it said on 3 May.Vale stated on 4 May that the stated value is

not based on the Samarco dam accident, but rather on “an unjustified comparison with the [BP’s] Deepwater Horizon oil spill in the Gulf of Mexico”. Vale added that Samarco has taken all necessary emergency actions, and that studies and social, economic and environmental remedial measures are already under way, pursuant to the agreement already entered into by Samarco, BHP and Vale with the federal and state authorities.

Imports of welded stainless pressure pipe from India into the USA have had preliminary anti-dumping duties imposed by the US Department of Commerce. All Indian producers and exporters received a preliminary dumping margin of 18.90% except for Sunrise of Mumbai, which received a margin of 1.91%. A final determination by Commerce is expected by September 17, while the US International Trade Commission, which will determine whether or not the imports have materially hurt the domestic US industry, is expected to make its decision by October 31. The anti-dumping petition was filed on September 30 by US companies Bristol Metals, Felker Brothers, Marcegaglia USA and Outokumpu Stainless Pipe. First voice-brokered trade deal for LME steel

scrapA voice-brokered deal on the London Metal

Exchange’s steel scrap contract was cleared for the first time on 4 May. The trade, comprising 1,000 tonnes (100 lots), was executed by international commodities firm INTL FCStone, a category-1 member of the LME, on behalf of steel trader Stemcor. The LME launched two ferrous contracts – steel scrap and steel rebar – in November 2015, with 35,990 tonnes (3,599 lots) of scrap and 9,600 tonnes (960 lots) of rebar being traded since the contracts launched, the LME said on 10 May. “Real industry prefers to hedge through trades quoted over the phone by their brokers, so this first voicebrokered trade shows that these contracts are being accepted as risk-management tools for the steel industry,” said Matthew Chamberlain, head of business development at the LME.

Algeria and UAE Invest in Rebar Plant Indian Stainless Pipe Hit With US Tariffs

The volume of all Turkish steel exports fell 7.8% y-on-y in 2015 to 16.2 million tonnes, bringing in about $9.9 billion – that is a y-on-y drop of 25.1%. The Middle East remained the leading export market for Turkish steel despite political and economic unrest in the region. Turkey exported 5.3 million tonnes of steel products to the Middle East last year, down by 14% y-on-y. Exports to Europe totalled 2.8 million tonnes, while 2.5 million tonnes were shipped to North America. Exports into North Africa totalled 2.3 million tonnes – a 23.7% increase which the Turkish Steel Exporters Association described as “remarkable”.

Turkey exported 7.3 million tonnes of rebar, 1.8 million tonnes of welded pipe, 1.7 million tonnes of hot rolled coils and 1.5 million tonnes of sections in 2015. The balance included a range of other products, such as semis, other flat products, wire rod and alloy steels. “Overall, 2015 was a tough year for the Turkish steel industry amid the global problems and political instability in the country. The industry’s export volumes remained below the previous year’s due to problems in the local and export markets and falling global steel prices,” اİB chairman Namık Ekinci said.

International

News in Brief

The European steel industry, via its association Eurofer, has welcomed the resolution by the European Parliament on 12 May to reject market economy status (MES) for China. A total of 651 members of the European Parliament (MEPs) voted on the issue, with 546 voting against granting MES, 28 voting to accept it, and 77 abstaining. “A significant majority of members of the European Parliament do not believe it is the right time to grant China MES,” said Axel Eggert, director general of Eurofer. “China is not a market economy, and thus cannot be treated as such for the purpose of anti-dumping investigations,” he added.Tenaris invests in new threading line in UKTenaris has invested $4.5 million in a fully

automated threading line at its facility in Aberdeen in north-east Scotland, UK. The new threading line increases the plant’s annual production capacity to 10,800 pieces, up from 3,600, and allows Tenaris to “better serve customers operating in extreme conditions with a technology that increases operational efficiency, improves safety, minimises the environmental effects of drilling and reduces costs,” the company said.

Brazilian competition regulator Cade has approved the sale of Vale’s stake in ThyssenKrupp’s CSA slab plant in the country’s south-eastern Rio de Janeirostate to the German steelmaker. The decision “does not include any restrictions”, Cade said in Brazil’s official gazette. At the beginning of April, Vale announced the sale of its entire 26.87% interest in CSA’s 5 million tpy slab plant to ThyssenKrupp, as part of its initiatives to streamline its asset portfolio.

Nippon Steel & Sumitomo Metal Corporation (NSSMC) has agreed to pay up to ¥155billion ($1.42 billion) to raise its stake in Nisshin Steel to 51% and turn it into a subsidiary. The acquisition could generate synergies of at least ¥20 billion ($184 million) per year for thenext few years, helping both steelmakers tackle a “rapidly deteriorating” environment in the global steel industry, NSSMC said on 13 May. NSSMC currently owns an 8.31% stake in Nisshin Steel, a blast furnace-based steelmaker specialising in stainless steel, coated steel and special steel products. Nisshin Steel will continue to be a listed company after it becomes NSSMC’s subsidiary.China’s largest steelmaker, Hebei Iron & Steel, has promised to lead the country’s efforts in restructuring the steel industry by eliminating 5.02 million tonnes of its steelmaking capacity by the end of 2017.

Tenigal to Double Galvanizing Capacity

Eurofer Welcomes China’s MES Rejection

Sale of Vale’s CSA Stake Approved

NSSMC to Acquire 51% of Nisshin Steel

China could file suit at the World Trade Organization in order to protect its steel industry, the commerce ministry said on Tuesday, after the United States said

some steel imports from China were hitting US producers.The US International Trade Commission said

on Friday that imports of corrosion-resistant steel from China and four other countries were harming US producers, the final step in the imposition of US anti-dumping and anti-subsidy duties, Reuters reported.The US Commerce Department had already

slapped duties of up to 450% on the steel products from China and duties ranging from 3% to 92% on corrosion-resistant steel from Italy, India, South Korea and Taiwan.The ministry said Washington’s large anti-

dumping and anti-subsidy duties would force Chinese companies to pull this type of steel product out of the US market.“China’s steel industry export interests will

suffer a serious impact and the Chinese steel industry is strongly opposed to this,” the ministry said in a statement posted on its website.“With regard to the United States’ mistaken

methods that violate WTO rules, China is and will continue to take all measures, including filing suit at the WTO, to strive for fair treatment for enterprises and safeguard their export interests,” it said.Steel mills in China, the world’s biggest

producer and consumer of the metal, have raised production and beefed up exports despite the government’s efforts to cut overcapacity. This has escalated trade spats between China and other steel producing nations, such as Japan, India and the United States.The commerce ministry has said that it is deeply

concerned about protectionism in the US steel sector. It argues that the difficulties facing the global steel sector have resulted from falling demand, and that trade protectionism from the US will intensify conflicts and disputes.US Breaching RulesChina’s Hebei Iron & Steel Group, its biggest

steelmaker by output, accused the United States recently of breaching WTO rules and said US protectionism is damaging the world steel trade.The US International Trade Commission last

month launched a probe into Chinese steel mills accused by United States Steel Corp of stealing its secrets and conspiring to fix prices.“The protectionist behavior taken by the US

based on purely groundless accusations by US Steel has seriously broken the WTO rules,

distorted the normal world steel trade and damaged the essential interests of Chinese steel mills and US steel users,” the statement published on the company’s website said.Hebei Iron & Steel said it would appeal the

probe, without saying to whom, and called on the Chinese government to take measures in line with WTO rules to maintain the legal interests of Chinese steel mills.Steel Exports Surge Despite Domestic DownturnSteel industry was one of Iran’s primary

industrial sectors to benefit from the lifting of sanctions imposed on the country over its nuclear energy program, as part of the July 14 nuclear accord reached with world powers.Access to modern production technologies and

the reopening of international markets to Iran at a time of slump in the domestic steel market enabled Iranian steelmakers to double their crude steel exports last year.About 1.8 million tons of crude steel were

exported in the last Iranian year (March 2015-16), indicating a 200% surge compared to a year before, Iran Steel Producers Association reported on its website.About 1.7 million tons of steel sheets and

302,000 tons of billets were exported in the same period, recording an 11% and 22% rise respectively.According to the report, Iranian crude steel

stockpiles have already depleted, thanks to last year’s booming exports. Inventories will soon be replenished, however, as despite the global rout in steel production by nearly all major global steelmakers, Iran posted a robust rise in crude steel output in the first four months of 2016.According to data from World Steel Association,

over 5.5 million tons of crude steel were manufactured in Iran from January to April, indicating a 1.5% growth compared to the corresponding period of 2015.Also, the output in April stood at its monthly

high of 1.5 million tons, up 7.8% compared to last year’s similar month.This is while Iranian steel mills also set a new

record by exporting more than 4.1 million tons of steel products valued at about $7 billion last year, indicating an over 4% rise in terms of volume compared to a year before, according to Mehdi Karbasian, deputy minister of industries, mining and trade.Karbasian, who is also the head of Iranian

Mines and Mining Industries Development and Renovation Organization, had previously predicted that steel exports would reach a record high of 3 million tons by the yearend.

“The achievement (last year’s record exports) shows that Iranian producers managed to weather the steel crisis, amid faltering demand in the domestic construction sector and the glut in global markets caused by the dumping policies of China and Russia,” he was quoted as saying by IRNA.He also pointed to the hike in tariffs set on steel

imports this year and the relatively unchanged energy prices as two of the primary incentives for steelmakers to further embark on exports.The revised import tariffs, meant to protect the

domestic industry against the Chinese dumping onslaught and approved by the government Cabinet during the first days of the current year,

included a 5% hike for steel ingots to 15%; a 10% jump for hot rolled sheets to 20% and a 10% rise for plated steel sheets to 20%.Iran aims to become the world’s sixth largest

steel producer as per its National Vision Plan (2005-25), which stipulates the production of 55 million tons of crude steel per year.Experts believe the ambitious target is feasible,

as the domestic industry is required to export close to 20 million tons annually.However, they contend that the domestic

infrastructure does not allow for the export of more than 7 million tons per annum. This is something the government is expected to address.

China AccusesUS of HarmingGlobal Steel Trade

source:Metal Bulletin

Mexico’s Tenigal, a joint venture between Ternium and Nippon Steel & Sumitomo Metal Corporation (NSSMC), will more than double its output capacity of hot-dipped galvanized and galvannealed steel sheets. A 430,000 tpy second hot-dipped galvanizing line is expected to start production in 2019, following a $300 million investment. The new facility, which will be located in Ternium’s industrial centre in Pesqueria, near Monterrey city, will take Tenigal’s capacity to 830,000 tpy; the first line was commissioned in September 2013. Mexico’s automotive sector is among the fastest growing in the world, said Ternium, with output expected to reach 4.90 million units in 2020.Renault to invest €600 million in Spanish

operationsCarmaker Renault will inject €600 million

($683.63 million) into its production operations in Spain by 2020, the French company confirmed to Metal Bulletin sister publication Steel First on 9 May. Renault Spainproduces steel-based cars including the Captur, Twizy and Mégane. Production of a new vehicle, the identity of which has not yet been announced by Renault, will be assigned to its plant in Palencia, north-west Spain. An aluminium injection workshop at the factory in Valladolid, in central Spain, is also part of the planned investments. This will begin operations in 2018 and will make parts for Renault’s new four-cylinder engines.

STEEL NEWSLETTER

NEWS

www.msc.ir Aug/sept. 2016 No. 13

08

The director of Isfahan Province’s Industries, Mines and Trade Organization says one-fourth of the jobs created in the province is

in the steel industry.Esrafil Ahmadiyeh made the remark

in a gathering of those involved in efforts to hold the 9th International Exhibition of Steel, Metallurgy, Foundry and Related Mines (Metalex 2016) and added Mobarakeh Steel Company (MSC) which accounts for 70 percent of all steel produced in the country will have a strong presence in the international event in Isfahan.He further said steelmaking is an

extensive industry which contributes to other industries in the country, but at the same time needs their help.Around $4 billion in investment – three-

fourths of the overall investment in the province – is needed for more than 1,500 steel-related units which are under construction or development in Isfahan Province, he said, adding this will create jobs for 66,000 people.Ahmadiyeh went on to say that in light

of the fact that the sales of the steel industry have been good in the past, it has barely felt the need for promotional efforts or events, but now, due to

recession gripping the construction industry and technological defects, it is in need of advertising. “That’s why a strong presence in specialized exhibitions is of great significance,” he stressed.The official said modern technologies

the steel industry needs can help solve environmental problems, adding exhibitions are a perfect venue for efforts to introduce and transfer modern technologies. He pointed to the incentives the Ministry

of Industries, Mines and Trade is to offer to exporters in overseas exhibitions and said industrial groups have been informed of such incentives so that they can make proper planning for participation in the exhibitions.Ahmadiyeh also said the steel industry

merits an exhibition which displays its potential and capabilities, adding the steel industry’s active units should do what it takes to make their presence felt in such events.In the gathering which was attended

by state officials and 70 steel industry figures at MSC premises, the managing director of Isfahan Province International Exhibition Company (IPIECO) said the exhibition of the steel industry has not been given the support it deserves by the

key players of the steel industry. Rasoul Mohagheghian further said in light

of the significance of the steel industry in Isfahan Province, the Trade Promotion Organization of Iran has named the international exhibition due to be held in August as “the national steel exhibition”.He said major universities in the

country – including those in the province – the Steel Research Center, the Iron and Steel Society of Iran, the Iranian Steel Producers Association, the guild of Casting Plants, the Iranian Corrosion Association, the Iranian Mining Engineering Organization and the Iranian Producers and Exporters of Mineral Products Association have lent support to Metalex 2016, but key players of the steel industry and managers of the state- and private-run steel groups will not participate in the international event which focuses on market research.He said thanks to the special

characteristics of the steel industry in Isfahan Province, we have high expectations of the industry in the coming event with the headquarters of Metalex 2016 trying its best to join hands with key steel industry players to meet these expectations.The official also said the potential of the

steel industry in Isfahan requires annual exhibitions, and added if the potential of the event is not fully unlocked, expectations from the industry cannot be fulfilled. The exhibition provides an ideal place

for developing a market and starting off trade transactions, Mohagheghian said, adding some industry players [wrongly] think that they need to attend an exhibition in boom periods but the fact remains that it is in crunch time that an exhibition can offer new markets and solutions to industrial units.He then praised Mobarakeh Steel

Company for its active participation in the ninth International Exhibition of Steel, Metallurgy, Foundry and Related Mines and said MSC will display its capabilities in Sheikh Bahaei Hall (August 2-5).He reiterated that exhibitions are a

perfect place to present capabilities

in recession times and help businesses climb out of crises and find new markets, adding unfortunately certain exhibition managers characterize their events as opportunities which open up in boom times.For his part, the deputy chairman of

Isfahan Casting Industries Co. said Isfahan is the hub of the steel industry in Iran, adding there are as many as 35 active casting and metallurgical part units in Ashtarjan Industrial Park.Nasr said Isfahan Province has huge

potential of exporting steel products and added by offering standard international services we can further develop this exhibition. He said the steel industry needs an exhibition it truly deserves. At the end of the meeting, a number of

key players of the steel industry aired their viewpoints on the ways to upgrade the quality of Metalex as well as on the challenges the steel industry is facing.

Steel Industry Accounts for One-Fourth of Jobs Created in Isfahan

However, in Brazil, mills have been suffering with the coun-try’s economic recession, with national GDP contracting by 3.80% in 2015, according to the country’s statistics agency, IBGE. Lack of demand in the domestic market has forced producers to rationalise production, including the closure of facilities. Flat-rolled steelmaker Usiminas, ranked 68 in the MB list, stopped steel-making activities at its Cubat o Paulo state, inاo works, SاJanuary. The plant, which has slab production capacity of 4.5 million tpy from two blast furnaces, is only operating its rolling lines. This stoppage will impact its already fallen output levels. Last year, the company produced 5 million tonnes of crude steel, down from 6.05 million tonnes in 2015.In Janu-ary, Rio de Janeiro-based steel-maker CSN also decided to halt its 1.4 million tpy No. 2 blast furnace at Volta Redonda for a period of 90 days. After this period, ending in April, it would evaluate whether it would per-manently shut down the plant, but it has not provided an update on the facility to date. Long-steel-focused steelmaker Gerdau, ranked 17 in the MB list, has also reduced its output levels in Brazil because of weak demand, with its domestic units operating at an average utilisation capacity of around 67% by the end of the first quar-ter. Globally, Gerdau saw its crude steel output fall to 16.82 million tonnes in 2015 from 18.02 million tonnes a year ear-lier. Brazil’s steel industry has long been suffering from the import of low-priced Chinese products, which have gained a significant market penetration. But with the strong devaluation of the Brazilian Real against the US dollar this year, imports have not been considered vi-able as import prices are now muchhigher than local ones.

Brazil GDP suffers

Call for ActionTااD said that even though other big steel-importing countries took immediate

measures against dumped imports, Turkey failed to take such measures and became the main market for dumped products in 2015. Turkey’s steel imports from China tripled in the year to 3 million tonnes, while imports from Russia increased by 86% to 4.3 million tonnes. These two countries combined had a 52% share of Turkey’s total steel imports. It added that the decision by the government to support local suppliers needs to be implemented immediately, provided measures to improve competition in global markets are taken. The Turkish government needs to take steps to apply the decisions in its 2016 Action Plan, especially its “programme to reduce dependency on imports”, TااD warned in January this year.

National

in Brief

Contribution by all members of staff at Mobarakeh Steel Company (MSC) helped the steelmaker ride out last year’s storm, the MSC managing director told a 23rd annual productivity conference of the steel giant. Bahram Sobhani hailed the wholehearted

efforts of MSC personnel in trying times as a sign of organizational agility and development as he drew closer attention to the question of productivity. “Productivity is an unavoidable necessity and

key to the survival of institutions and should be observed at all organizational levels, not just in production, but in human resources, energy, financial resources, etc.,” he said. Recalling the challenges of the steel

industry in Iran and around the world which have pushed down the profit margins of steelmakers, the MSC chief said the crisis gripping the industry seems to be here to stay and the only way steelmakers can ride it out is through across-the-board productivity which can put them on track to recovery. Sobhani cataloged the factors that are crucial

to productivity: staff, quality, less waste, lower consumption, suppliers, customers, maintenance and repairs and management and said each of these factors can help promote a company’s productivity. As for the role of cost management in

promoting productivity, he said failure of companies to stick to their production goals results in a pile-up of inventory destined to be sold later at a lower price which in turn leads to a lot of lost revenues and a drop in quality. “Prevention of waste is a pillar of cost management which pushes up productivity.” The managing director of Mobarakeh Steel

Company went on to say that planning can help improve weight efficiency and decrease the volume of iron and non-iron waste shipped to the waste depot, adding we need to copy the best practices of our rivals and keep comparing ourselves to them in a bid to match up to the best in the industry. Comparing the energy consumption of MSC

with that of other steelmakers around the world. Sobhani said in plants where our energy consumption is more than that of our rivals, we need to opt for modern technology to improve our status. He further said excessive quantity of orders

when it comes to spare parts pushes up ordering costs and should be avoided as part of optimal cost management. “We need to reduce the volume of idle capital for which

we are paying 25 percent in interest. When it comes to productivity of human resources which is measured in man-hours per ton, we lag behind our rivals. We need to make up for the deficit by raising our output volumes.” The MSC managing director underlined safety

and said speed should never come at the expense of safety. In remarks aimed at MSC staff members, he

said, “You need to play close attention to the responsibilities you are entrusted with and protect yourselves and the company’s assets in a bid to raise productivity.” In conclusion, he voiced pleasure over

improving productivity levels at MSC and said members of staff have helped set the company’s goals and achievement of these goals will amount to a giant step toward improved productivity at Mobarakeh Steel Company. Later, Farzad Arzani, the chief technology

officer of the steel giant, presented a detailed report about the measures the company took to improve productivity last year [ended March 20, 2016] and thanked the 2,413 “productive staff members” of the company for their involvement in efforts to achieve the objectives of their respective units, for their individual contribution to plans to improve safety and for their discipline. According to the same report, a number of

staff members also took the microphone to air their views on ways of achieving better productivity in the company. One of them referred to the large number

of MSC personnel who have retired in recent years and described training replacements for the retirees as a major challenge and recalled the cost-cutting measures of the human resources department. In response, the MSC managing director said

certainly replacing retiring staff members is of great importance to him and other senior managers of the company. “When veteran staff members leave and their absence creates a vacuum in the company, we have to work out plans to replace them. Fortunately good measures have been taken on that front.” The MSC chief then talked about the difference between conservation and cost management and said the MSC plans make no mention of conservation; rather, they focus on economic management. Emphasis has always been put on cost management and not on cutting corners. In cutting corners, certain things are eliminated, whereas in cost

management, waste of resources is avoided.” He added, for instance, parallel contracts

signed to take care of a single job should be avoided. “And we should think twice before spending money on hiring assistants or contractors in areas with no output. To the best of my recollection, these were the issues we raised in our meetings. If MSC were at a critical juncture, we might talk about cutting salaries, but so far there has been no mention of introducing changes to the salary system.” He went on to say some issues may

mistakenly be attributed to the managing director, adding, “The problems have been raised and now everyone should be after solutions to those problems. Cost management should be implemented in every corner of Mobarakeh Steel Company. Orders which are not well thought out will only result in a hike in inventory costs. That is where cost management steps in and prevents the waste of resources.” He thanked all those who participated in the discussion and said, “Critiques should be welcomed in a bid to redress shortcomings. We need to join forces to turn MSC into a company with high levels of productivity.” Another staff member recalled the importance of a strategic roadmap in achieving the set goals of the company and said the roadmap envisions the important responsibilities of each division. In fact it spells out everything that should be undertaken to lift the company if and when it is in crisis. He urged all members of staff to view the roadmap as mission of MSC and do whatever they can to help achieve its provisions. Achievement of the good measures envisioned in the roadmap will put MSC in a better position over last year when it comes to realization of the stated goals. Another staffer said the management should

make efforts to boost the technical offices of different plants and urged MSC managers to settle the problems related to the complementary insurance of the staff. Modaresifar, who is in charge of the MSC

department of healthcare, safety and the environment, said Iran Insurance Co. handles the healthcare insurance of staff members, both those with permanent contracts and otherwise. He said the insurance company does not cover foreign-made drugs which are produced locally. As for refractory diseases, the decision on whether or not the medicinal costs are covered hinges on the decision of a Medical Commission.

After nearly 10 years, sponge iron production plants of the so-called “Seven Provincial Steel Projects” will become operational by the end of the Iranian year (March 2017), announced the head of Iranian Mines and Mining Industries Development and Renovation Organization.“The inauguration of the sponge iron plant

of Sepiddasht Steel Complex, located in Chaharmahal-Bakhtiari Province, is only pending the construction of a 60-kilometer-long water pumping route from the Chaghakhour Dam to the plant,” Mehdi Karbasian said, adding that provincial officials are working to resolve the issue.Furthermore, the sponge iron plant of Khuzestan

Province’s Shadegan steel project will come on stream by the end of September, and East Azarbaijan Province’s Mianeh plant, Fars Province’s Neyriz plant, Khorasan Razavi Province’s Sabzevar plant, Kerman Province’s Baft plant and South Khorasan’s Qaenat plant will start producing sponge iron by the yearend.The sponge iron plants are being equipped with

European and Chinese production machinery.“The inappropriate location of the plants,

underdeveloped water, electricity, gas and transportation infrastructure and lack of funding were the primary causes of the delay of projects,” Karbasian, who is also deputy minister of industries, mining and trade, was quoted as saying by IMIDRO’s news portal.According to IMIDRO, the seven plants will add

at least 6 million tons to Iran’s annual crude steel output, while creating 7,000 direct and 35,000

indirect jobs.The seven projects date back to 2006 when

the government decided to implement eight steel projects in the provinces of Chaharmahal-Bakhtiari, Fars, Khuzestan, Yazd, Kerman, East Azarbaijan, South Khorasan and Khorasan Razavi.After only one of the projects was taken over

by the private sector, the rest were not well received due to their inappropriate locations and undesirable physical progresses. Therefore, IMIDRO took over 65% of the projects’ shares and undertook the task of attracting the required investment.The organization’s most important move was to

attract finance from the Metallurgical Corporation of China–a state-owned enterprise. However, the required letters of credit could not be opened until nine years later, mainly due to banking restrictions imposed on Iran as part of western sanctions against the country over its civilian nuclear energy program.As per the 20-Year National Vision Plan (2005-25),

Iran’s steel industry is stipulated to become the world’s sixth largest producer of the industrial material, producing 55 million tons of crude steel per year by 2025.Karbasian believes that to achieve the envisioned

goal, iron ore extraction needs to reach 135 million tons per year from the current 40 million tons, and iron ore and pellet production needs to rise to 77 and 72 million tons per year from the current 24 and 22 million tons respectively.

Productivity a Key to Survive Organizations

7 Provincial Steel Projects Go on Stream by Yearend

Rebar DominantTurkey exported 7.30 million tonnes of rebar in 2015, which was 6.26% lower than the total

exports in 2014, according to the Turkish Statistical Institute (TUIK). The fall in export values was much sharper because of weakening prices. Turkish rebar exports were worth at $3.08 billion, down by 29.21% from the $4.35 billion achieved in 2014. Turkish mills managed to increase their exports into the USA, which became the top export destination. Turkey’s exports of 1.36 million tonnes of rebar to the USA in 2015 was up by 45.25% y-on-y, while the country’s exports to UAE fell by 4.64% to 1.27million tonnes in the same period. Egypt was another growth market for Turkish rebar exporters in 2015, increasing its rebar imports from Turkey by 99.01% y-on-y to 832,651 tonnes. But Iraq – one of the most important export destinations for the mills in Iskenderun region – decreased its rebar imports from Turkey by 18.98% y-on-y to 620,775 tonnes, given ongoing political problems.

NEWS

STEEL NEWSLETTERwww.msc.ir Aug/sept. 2016 No. 13

11

Improvements Made

Making the Grade

Total crude steel production in the Middle East fell by 3.63% in the first four months of 2016, totalling 8.96 million tonnes, down from 9.30 million tonnes year-on-year, according to worldsteel (which excludes Turkey from this regional category). However, production in Iran increased by 1.49% to 5.57 million tonnes, and in the UAE by 9.98% to 1.05 million tonnes. Output in Saudi Arabia fell by 22.79% to 1.57 million tonnes, and in Qatar by 6.25% to 780,000 tonnes. Turkey’s output rose by 2.82% year-onyear to 10.58 million tonnes in January-April. Steel prices in the Middle East have steadily increased since January 2016, as elsewhere in the world, but the rises slowed, or even reversed, in May. One reason for the slowdown is that most producers have filled their order books up to August, and buyers prefer to be cautious about low demand in summer. Another reason is falling raw material prices, led mainly by China. Meanwhile, Dubai Investments Industries, a

wholly owned subsidiary of Dubai Investments, and Abu Dhabi National Co for Building Materials (Bildco) signed a memorandum of understanding in April on a joint venture for a rebar plant in Musaffah, Abu Dhabi, UAE.Dubai Investments Industries will have a 51%

stake, with the remainder to be held by Bildco. The steel plant will have a capacity for 300,000 tpy of rebar, and start-up of production is planned by the end of 2017. After speculation around the fate of Italy’s Ilva steelworks, Turkey’s Erdemir Group announced that their “analysis about Italian steelmaker Ilva’s privatisation process is still in progress and no binding offer has been made for the company”. Consortiums headed by Turkish steel producer Erdemir and Italian steelmaker Arvedi are being suggested by various Italian media as potentially having an interest in Ilva’s assets. Erdemir, Turkey’s biggest steel producer group, has over 9 million tpy of crude steel Capacity.

The Brazilian industrial sector, including the steel industry, has been suffering with the worsening of the country’s economic conditions, influenced by a political crisis – on May 12, Brazil’s senate voted for the impeachment of national president Dilma Rousseff. Rousseff was forced to step down for 180 days to defend herself, and Brazil’s vice-president, Michel Temer, then took the role as interim president. The impeachment proceedings against Rousseff were started in December 2015 by the former speaker of Brazil’s lower house of congress, Eduardo Cunha, over allegations that she broke fiscal laws by mismanaging government accounts ahead of her re-election in 2014. Rousseff denies any wrongdoing, and considered the approval of the impeachment process a “coup”, she said on May 12. The country’s attorney general, José Eduardo Cardozo, who defended Rousseff in the motion, said the impeachment request did not have a legal basis and that the opposition wanted

to remove a democraticallyelected president. And Cunha, who is himself battling charges relating to bribery allegations, was suspended by Brazil’s top courton May 5, accused of trying to obstruct a corruption investigation against him and of intimidating lawmakers. Meanwhile, Brazilian flat-steel association Inda sees a “better outlook” for the country’s economy, following the impeachment vote for Rousseff. Inda is positive about the new nominations for the economic offices of the government, whose finance minister is now Henrique Meirelles. The interim government also named former CSN ceo Maria Silvia Bastos Marques as head of the country’s development bank BNDES on May 16, while Itaا BBA chief economist Ilan Goldfajn was announced as president of Brazil’s central bank on May 17. The federal government’s primary budget deficit could reach 170.5 billion Reais ($487.69 billion) in 2016, Meirelles said on May 20.

Middle East

Output Falls, Price Rises SlowLatin America

Political Crisis Rocks Brazilian Outlook

Asia

China’s Rebalancing andthe Asia-Pacific

Several improvements to coiling furnace design have been made over the years in order to ensure coiling and heating stability and uniformity at the two coiling furnaces. For example, a fully-enclosed, rather than originally open-bottom, furnace design is used. Danieli Centro Combustion has installed self-recuperating burners to save energy. Threading systems have been redesigned to avoid the risk of cobbling. Tension control is achieved by differential hydraulic loopers. High-strength structural steels with good toughness can be produced on Steckel mills,

but the long, asymmetrical interpass times and large temperature differences between the head, tail and the body of the material at the end of hot rolling must be taken into account. Plates and coils for welded line pipe for API 5L specifications up to X80 grade can be made, provided the metallurgical design of the steel and the right micro-alloying system is chosen. Intense direct quenching can be used to lower the alloy content needed or to develop structural steel grades with the greater strength of X100 or higher.

International International

News in Brief

Despite a rise in import duties on steel products in Iran, Chinese suppliers maintain their position in this market, especially in the segment for flat products, even posting somewhat better performance in the first half of 2016.Metal Expert, a Ukraine-based provider of news

and analysis on steel products and steelmaking raw materials industries, reported.In January-June 2016, supplies of Chinese steel

products to Iran inched up by 1% year-on-year to 653,000 tons, according to customs statistics. In value, China’s exports amounted to $286 million tons. Chinese sellers managed to increase their presence in the Iranian market even in spite of import duties on flats, which have risen to 20-26% depending on the type of product since the start of the current fiscal year (March 20, 2016).The restrictive measures affected only the

structure of supplies. In particular, purchases of plate, CR (cold rolled) and coated steel decreased. At the same time, imports of HRC, constituting the greater part of Iran’s purchases, surged almost 1.5-fold. As a result, the product’s share in deliveries from China went up by 13 percentage points year-on-year to 45% from 32% in H1 2015.Increase in supplies of HRC from China is

attributed to slight improvement of demand in the Iranian market as well as lack of thinner-gauge material. Even though Iran’s largest flat steel producer Mobarakeh Steel Company (MSC) plans to reduce Iran’s reliance on imported 2 mm HRC by switching its subsidiary Saba Steel Complex (SSC) with the capacity of 700,000 tons per year to production of this material (up to 70% of the order book).

Mobarakeh Steel Company (MSC) has decided to expand its output basket in order to meet the needs of domestic rolling plants. In a meeting of the MSC management committee

attended by the managing director, the company set a new target – production of billets and blooms – to meet the needs of domestic consumers. Speaking at the meeting, Mahmoud Arbabzadeh,

who is in charge of operations at Mobarakeh Steel Company, said in light of the fact that we needed to supply billets and blooms for rolling plants to clear the hurdles standing in the way of launching the production cycle and following the emphasis Dr. Sobhani – MSC Managing Director and the head of Iran’s Steel Producers Association – has put on the production of new items, experts at MSC began to examine the possibility of producing billets and blooms. To that end, a team comprising managers and experts of the steel making, continuous casting, central repair shop, metallurgy and production methods, and technology, sales and marketing units studied the issue and worked out a set of strategies in the form of short- and medium-term measures, he said, adding they also discussed their decisions in a meeting attended by the managing director. Arbabzadeh went on to say the company is pursuing two strategies as part of short-term measures: A) improvement of the casting mold of one of the devices which produces slabs to make blooms (300*200 mm). The blooms’ parts have been designed and built and are being installed on the mold. B) Turning the slabs in the roughing stands into 150 mm-thick blooms by tapping into the potential of Hot Rolling Plant. The blooms are then cut into smaller pieces (150*150 mm). The company’s agenda includes production of blooms in new sizes (300*200 mm and 150*150 mm) and measures to meet the needs of domestic customers as soon as possible.The MSC official further said the company has studied the technical aspects of a medium-term strategy which is being laid out. “We have planned to install a billet casting unit along the existing casting lines to use the molten steel produced as a result of the added capacity to the steel making unit to produce billets.”He said initial talks are underway with the manufacturers of these devices, adding thanks to the enormous potential of domestic engineers and consultation with big international companies, they are predicted to be installed as soon as possible. When these devices are installed, Mobarakeh Steel Company will start to produce different types of steel billets, he concluded.

MSC Seeks to Expand Output Basket by Producing Billets and Blooms

China Maintains Clout in Iran Steel Market

In 2015, Mexico overtook Brazil for the first time in terms of steel consumption. Apparent steel consumption in Mexico increased by 5.8% last year compared with 2014, to 24.20

million tonnes, according to the World Steel Association (Worldsteel). Brazil’s apparent steel consumption, meanwhile, fell by 16.70% over the same period, to 21.30 million tonnes, it reported. For 2016, steel use in Mexico is forecast to reach 25 million tonnes, while Brazilian steel consumption is predicted to total 19.40 million tonnes, according to Worldsteel. Many consider Mexico to be the most interesting steel market in Latin America due to its import substitution potential for both steel itself and steel goods, as well as its manufacturing dynamism. The positive perspective for Mexican steel demand is being driven by its industrial sector, mainly automotive. Car production grew by 5.60% in 2015, totalling a record high of 3.40 million units, according to the country’s automobile association, Amia. In contrast, Brazil’s major steel consuming sectors, such as automotive and construction, have reduced activity levels due to weak economic conditions. The car industry saw its output volumes plunge

by 22.80% in 2015 to 2.43 million units, from 3.15 million in 2014, according to domestic automobile association Anfavea. The positive outlook for Mexican steel demand has led local companies to raise output and eye new investments. Tenigal, a joint venture between Latin American steel group Ternium and Nippon Steel & Sumitomo Metal (NSSMC), announced in late April a $300 million investment to double its capacity of galvanized steel to 830,000 tpy in 2019 from the existing 400,000 tpy. The expansion is intended to serve the Mexican industrial and automotive markets, according to Ternium, which is ranked No. 41 in MB’s world steelmakers list for both 2016 and 2015 editions. The other two Mexican companies ranked in the MB listing, Ahmsa and Indاstrias CH (ICH), are not expected to announce significant expansion projects this year, as they have both increased their capacities recently. Ahmsa ended 2015 with a record high crude steel output, at 4.46 million tonnes, slightly up from 4.42 million tonnes in 2014. ICH did not report its output figures, but its steel sales volumes reached 2.44 million tonnes last year, against 2.50 million tonnes in 2014.

LATIN AMERICA

A Tale of Two Countries

China has been passing through a major rebalancing for the past few years, as it moves toward a more consumption-driven and less investment-driven economy. While the domestic impacts of such massive transition has been well studied so far, what are likely to be the main effects on the country’s trading partners? That question is what credit rating agency S&P Global Ratings recently analysed, looking specifically at Asia-Pacific nations. In aresearch report titled How China’s rebalancing shifts the ground under all of Asia-Pacific, the firm points out that China “has been or is fast becoming” the main trading partner for most of the countries in the region.Australia, for instance, has seen a “meteoric

rise” in the share of its exports going to China, which surged from 14% in 2007 to 34% in 2014 – the highest share in the Asia-Pacific region. Some 85% of such exports are raw materials, especially in the metals and mining sector. South

Korea, on the other hand, has almost the exact opposite profile. “It has no raw material exports to China and a roughly 85% share for capital and intermediate goods,” S&P noted. Taking a look at thousands of companies across different sectors in Asia-Pacific, the ratings agency noticed that the more a sector’s revenues are related to Chinese investment, the more likely its overall credit quality is to deteriorate. Going forward, consumption-driven sectors in the region such as software and services can expect more revenue and profit growth, and thus invest in more production, while investmentdriven segments like capital goods and real estate would need to deleverage in order to maintain a healthy credit profile, S&P points out. “Our results imply that if Asia-Pacific is to maintain healthy credit trends, a redistribution of financing needs to happen across sectors as Chinese rebalancing progresses,” it concluded.

STEEL NEWSLETTER

NEWS

www.msc.ir Aug/sept. 2016 No. 13

10

The uptrend in global steel prices has begun to show signs of weakness, starting in China. The earliest signs of fragility in prices

was the sheer surge in profitability, with a 50% month-on-month increase in indicative margins for both HR coil and rebar in China through April. However, MBR’s latest analysis illustrates that hot-rolled steel margins, versus hot metal costs at integrated mills in China, have come most of the way back down to where they were before the April price surge. We believe that one of the main points of price resistance through the beginning of the year was

the unwillingness of Chinese suppliers to perpetually deepen their unprofitability. The corollary of this implies that if steel margins begin to go back to levels which caused price resistance among Chinese mills, we would then hit a trough in the price downturn currently being experienced in China. If we take Chinese rebar as an example, after an export price rally that lasted two months right up to the beginning of this month, prices dropped sharply last week, removing about half of the price growth that had been achieved through the rally. At the time, MBR believed that this increased the likelihood that the price

surge, which peaked at $420/tonne fob, was a ‘spike’ with the implication that fundamental drivers were not fully responsible for the price surge. Events have proven this view correct.There are indications that rebar prices may not recede a further 50%, back to lows last witnessed at the beginning of this year. MBR’s estimate of Chinese rebar margins suggests that gains during March-April have been reduced back to lossmaking territory in May. This will be a key area to monitor as we look for evidence of the appetite for sustained lossmaking among rebar suppliers. For now at least, rebar suppliers seem to be unconvinced

that the fundamental environment justifies dropping prices back to levels where they were experiencing a RMB 400/ tonne loss. As result, much of the potential for further price declines in China depends on the need for Chinese suppliers to drop prices, in favour of volumes, which in turn depends both on the trajectory of domestic demand and

the competitiveness of Chinesematerial on the seaborne market. At the same time, export prices among Chinese suppliers’ rivals in Turkey, the CIS and elsewhere are dropping more quickly than Chinese fob prices. As a result, it seems likely that Chinese suppliers may cede further pricing ground in the weeks to come, both home and abroad.

How Far Will the Chinese Steel Market Correct?

Philip Bell, president of the Steel Manufacturers Association, said in late April that while the US steel industry has a world-class productivity rate of 1.9 man-hours per ton of steel, as well high energy efficiency and low carbon dioxide intensity, the US steel market is still under attack from imports. Clearly, the industry has won some vic-tories. Most recently the US Commerce Department, in their final ruling, imposed a total 522.23% duty against cold-rolled steel imports from China, which included a 265.79% anti-dumping duty and a 256.79% countervailing duty, while also imposing a 71.35% anti-dump-ing duty against cold-rolled imports from Japan. Bell says that while affirmative rulings in trade cases might help in the short term, a longer term solution is needed. Mario Longhi, president and ceo of US Steel, and AISI vice-chairman, says that China’s steel exports rose to 112 million tonnes last year and forced theA longer-term solution is neededUS industry to make some dif-ficult decisions, with employ-ment falling by over 13,000 in the past year even with the passage of such critical trade-related legislation as the Leveling of the Playing Field Act and the Enforce Act. US Steel has also recently filed a Section 337 complaint alleg-ing that some Chinese steel suppliers have conspired to fix prices, steal trade secrets and circumvent duties via false labelling. Bell calls China’s of-fer to reduce its steelmaking capacity by 150 million tonnes over the next five years “too little, too late,” especially since, according to the OECD, another 70-80 million tonnes of Chinese capacity is scheduled to come online.Thomas Gibson, AISI’s president and ceo, notes that while China did participate at the recent OECD steel talks, it refused to join in with the consensus of eight other nations on steps to address industry overcapacity. However, he says that he expects that the US government will continue to raise the issue of unfair trade and overcapacity at future summits.

Steel mills in Iran produced 10.1 million tons of crude steel during the seven months of 2016, which shows a 4.9% growth compared to the corresponding period last year, according to a preliminary report sent by the World Steel Association to its members including Iranian Mines & Min-ing Industries Development & Renovation Organization, and seen by the Financial Tribune.The report shows Iran’s July output recorded a 7.6% rise compared to the same month in 2015 as 1.3 million tons of crude steel was manufactured. However, despite the year-over-year growth in July, Iranian furnaces churned out less crude steel in July compared to the June performance, registering a 10% drop.

A longer-Term Solution is Needed

7-Month Crude Steel Output Tops 10m Tons

Making the GradeSteel is a continually-evolving family of materials,and recent developments aim to meet the needs ofspecific markets, reports Steve KarpelThe number of steel alloys to

choose from runs into thousands, but that does not mean that there is no longer a need to develop new grades. In fact, the rate at which new alloys are being developed, tested and commercialised seems to have risen in recent years with the intensifying competition between different materials, particularly in mass-markets such as automotive. Presented here is a selection of new steel grades that have come on to the market recently.

International

in Brief

MBR correctly forecast last month that global steel markets would go through a reckoning. Indeed, we have continued to suspect that prices were ‘spiking’, rather than on a sustained uptrend. From a demand perspective, the most recent data from China illustrate a reversal in CISA-member mill finished steel shipments so far in 2016. We estimate that shipments increased year-on-year through February (4.6%), March (7.1%) and April (4.4%). At the same time, mills seemed to feel confident enough to steadily slow the rate of decline in their output over the same period. March and April CISA member mill output of finished steel was largely flat year-on-year but down in the year-to-date having fallen sharply at the start of the year. The turnaround in demand is even more staggering when viewed month-on-month, with finished steel shipments increasing 17% in March, compared with only 1.2% month-on-month in March last year. MBR believes that it is no surprise that this sharper-thanusual upturn in demand led to a substantial improvement in sentiment, which may have ‘super-charged’ the price surge through April. This also explains partly why the price increase may have overshot above the level that is justified by improving fundamentals in China.

The extent of the correction has been mixed so far. Chinese domestic and export prices, which increased by the most relative to other regions since the end of last year, have also retracted by the most since the beginning of May. Chinese HR coil and rebar prices, both in and out of China, rose by over 50% and 60% respectively, between the end of last year and the final week of April. At the same time, since the first week of this month, these prices have also come down by between 15-20%. Local US and European prices have, on the other hand, continued to grow sharply. US EXW HR coil prices increased 39% in the year-to-April-end, and 17% through May, at the time of writing. EU HR coil prices also continue to increase, continuing along the uptrend established in previous months. On the whole, it may be argued that these prices have not increased as rapidly as Chinese prices, and hence there is less likelihood that they have ‘overshot’ the market value justified by fundamentals. Another risk factor in the USA and EU is that the seasonal increase in demand may dissipate in the coming months. At the same time, our expectation of a downturn in the scrap price will also increase thepressure on producers to pass on some discounts.

The uptrend, most notably in scrap and metallics prices we referred to last month, has endured over recent weeks. Key benchmarks, such as No.1 HMS, cfr Asian port, rose another 12% since the last issue to reside 66% higher than assessments at the end of last year. After a comparatively slow start, we notice coking coal prices have also surged over the past month, by about 11%, although to levels ‘just’ 21% higher than at the end of 2015. In contrast, iron ore, which so often follows its own trend, has finally retreated as expected, with the latest prices more than 10% down month-onmonth. Indeed at the time of writing, the daily benchmark (the MBIOI62) in May had slipped almost $4/tonne cfr on average to $56.62/tonne. In the year to April, as we have detailed before, iron ore’s general price revival seemed more dependent than usual on the fortunes of Chinese integrated producers which began to make money in March. If anything, iron ore’s own market fundamentals appeared to worsen at the start of the year, given the unexpectedly sharp cut in iron and steel production in January, and ever since, though Chinese demand has increased, supply to China has almost constantly exceeded it, judging by the steady rise in port stocks which account for the vastmajority of reported inventory. Indeed by May 20th they had risen to a 14-month high above 100 million tonnes, compared with 92 million tonnes at the end of last year. Although iron ore has a habit of decoupling from the patterns in other raw materials prices, it is retracted by the most since the beginning of May. Chinese HR coil and rebar prices, both in and out of China, rose by over 50% and 60% respectively, between the end of last year and the final week of April. At the same time, since the first week of this month, these prices have also come down by between 15-

20%. Local US and European prices have, on the other hand, continued to grow sharply. US EXW HR coil prices increased 39% in the year-to-April-end, and 17% through May, at the time of writing. EU HR coil prices also continue to increase, continuing along the uptrend established in previous months. On the whole, it may be argued that these prices have not increased as rapidly as Chinese prices, and hence there is less likelihood that they have ‘overshot’ the market value justified by fundamentals. Another risk factor in the USA and EU is that the seasonal increase in demand may dissipate in the coming months. At the same time, our expectation of a downturn in the scrap price will also increase the pressure on producers to pass on some discounts. clear that the downward correction over recent weeks has begun to impact prices of the better performing raw materials. A lack of deals explains the stability in the Turkish benchmark of late but Asian scrap prices have already fallen below their recent peaks (see chart). So long as iron ore continues to correct, the pressure on metallics and other bulk raw materials will continue. Indeed semi-finished steels such as billet have already lost much of their value through May, especially in the Chinese domestic market but increasingly in the merchant markets around the Black Sea. Import prices into Turkey for billet, which in recent years have traded at a $140/ tonne premium to imported obsolete scrap, reflecting conversion costs, are only $70/ tonne higher today. In part, the narrowing premiums have reflected the strong demand for scrap, given that production at mini-mills in Turkey has revived strongly since March after declining further at the start of the year. Assuming that billet prices continue to decline, following steel prices downwards, scrap prices are likely to follow suit; arguably more acutely.

Steel Markets Correct, Following Sharp Price Upturn

Iron Ore Correction Impacts Other Metallic

More BearishAnalysts at Goldman Sachs are even more bearish. They have kept their forecast for 2017 and

2018 unchanged at $35 per tonne cfr China in the belief that the price rally will have negative consequences further into the future. For now, Macquarie sees current prices of around $55 per tonne as “clearly justified by fundamentals”. The bank pointed to deferrals in supply growth, improving housing and land sales in China, as well as growth-supporting political climate in the world’s secondlargest economy as factors lending it confidence. However, “structurally we still see $60 per tonne as a cap to prices given the sensitivity of supply to restarts,” it added. Deputy general manager at Baosteel Group, Zhang Dianbo, recently said at an industry event in Singapore that steel prices in the second half of this year are likely to fall while margins steelmakers enjoyed earlier this year were not sustainable.

North America

Trading Blows

All eyes in the North American steel industry remain firmly fixed on trade issues as the presidential election approaches. The leaders of the USA, Canada and Mexico, following their North American Leaders’ Summit in late June,said they would hold regular Customs Steel Enforcement Dialogues in an effort to boost compliance of anti-dumping and countervailing duties on steel products. These dialogues are to be held in conjunction with meetings of the North American Trade Committee. John P. McConnell, chairman and ceo of Worthington Industries, said during his company’s earnings conference call that the flurry of recent steel trade cases could result in increased imports of finished steel-containing products as foreign producers look for alternative homes for their steel, regardless of trade cases. There are also concerns that a stronger US dollar could make imports of steel and steel-containing finished products more attractive.Both US presumptive presidential nominees

Hillary Clinton and Donald J. Trump have not only voiced opposition to the proposed Trans-Pacific Partnership (TPP), but have questioned the impact of the North American Free Trade Agreement (Nafta) and other trade deals on imports and the economy in general.Trump has called the North American Free Trade Agreement “a disaster” that has cost US jobs, and indicated that if he is elected he would either break or renegotiate the deal.Despite the fact that Nafta had been considered one of the signature achievements of Bill Clinton’s administration, Hillary Clinton has recently stepped back from supporting it, saying it should be reassessed and adjusted. She is also calling for a “timeout” of any new trade accords. But Philip K. Bell, president of the Steel Manufacturers Association, told AMM that repealing Nafta would be shortsighted, especially if the North American steel industry wants to continue to work together to fight unfair trade, excess capacity and dumping.

NEWS

License Holder:Esfahan’s Mobarakeh Steel co.Managing Director:Mohammad Nazemi HarandiChief Editor:Ahmad NajjarExecutive Editor:Maryam PanahiEditorial Dept:Tel:+98-31-33327327Fax: +98-31-33327328email:info@msc.irwebsite:www.msc.irProduced by Isfahan Today Media co.

Printed at Eshragh Ghalam co.

STEEL NEWSLETTERMobarakeh

source:Metal Bulletin

For 2016, all eyes will be on China’s domestic steel industry and how it will affect the country’s exports. Doubts about the Chinese government’s capacity to tackle overcapacity abound in the market, especially after local crude steel output increased to 69.42 million tonnes in April, averaging to an all-time monthly high of 2.314 million tpd. Earlier in the year, the China Iron & Steel Assn (Cisa) predicted that the country’s finished steel exports in 2016 would drop to about 100 million tonnes, down from the historic record of 112.4 million tonnes last year. However, between January and April shipments abroad rose 7.6% year-on-year to 36.9 million tonnes. To cope with what it called an “extremely severe” business environment, Japan’s NSSMC agreed in the middle of May to pay up to ¥155 billion ($1.4 billion) to raise its stake in Nisshin Steel to 51% and turn it into a subsidiary. Nisshin Steel, a blast furnace-based steelmaker specialising in stainless steel, coated steel and special steel products, produced 3.79 million tonnes of crude steel in 2015, moving down five positions in this year’s ranking. The transaction is expected to be concluded early in 2017. Down in Australia, while BlueScope has given up on plans to shut down one of its steelmaking plants, Arrium entered into voluntary administration in April. Two months before that, it had started to consider closing its integrated steelworks in Whyalla, South Australia, and resorting to semi-finished steel imports. In Southeast Asia, meanwhile, one of the centres of attention will be the imminent commissioning of Formosa Ha Tinh Steel’s first blast furnace in Vietnam. Comprising two furnaces and a crude steel capacity of 7 million tpy in its first stage, the $10.5 billion integrated steelworks is “currently the world’s largest new construction project in the steel industry”, Primetals Technologies recently stated. The mill will be the biggest in Southeast Asia – and will probably figure in the next edition of MB’s top steelmakers. Juan Weik

Middle East crude steel production fell by 2.35% in 2015, with total output 27,371,000 tonnes compared with 28,031,000 tonnes in 2014. Steel producers in the region intend to protect local production, and plan to impose 15% import duty on rebar. Most of the Gulf Cooperation Council (GCC) nations – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE – already impose a 5% import duty on rebar GCC steel producers also plan to form a committee intended to reduce steel imports into the region. Regional newspapers announced in February 2016 that representatives from eleven large GCC-based steel companies met recently in Riyadh, Saudi Arabia, to discuss the formation of the committee, and a further meeting is planned soon. The GCC region has steel-producing capacity of about 25 million tpy.

Challenges Ahead

MIDDLE EAST A Period of Adjustment

In 2015, the CIS steel market was greatly affected by declining export prices and shrinking consumption

at home amid an economic slowdown, although weak national currencies helped the region’s exporters to maintain profits from their exports. Major Russian mills shifted their focus from finished steel output to semi-finished production and exports. That was the quickest way to make money amid tough competition in the international flat and long steel markets, which are dominated by Chinese exporters. The country’s largest steelmaker Novolipetsk Steel (NLMK) boosted its semi-finished steel sales, including slab, billet and pig iron, by 24% to 6.07 million tonnes in 2015, while finished steel shipments fell by 4% to 9.79 million tonnes. Compatriot steel producer Evraz saw its finished product shipments drop by 15% to 8.20 million tonnes last year, while its slab and billet sales together grew by 12% to 4.91 million tonnes, and merchant pig iron sales increased by 52% to 552,000 tonnes. The increases in volume were mostly exported. In total, Russian exporters added 940,000 tonnes, or 8% year-on-year, to their semi-finished steel shipments abroad, with the exports reaching 13.20 million tonnes in 2015. However, steel consumption in the country dropped 11% to 40 million tonnes last year. CIS export billet prices averaged $328 per tonne fob Black Sea in 2015, down by $154 per tonne year-on-year, according to Steel First. CIS slab prices averaged $290 per tonne fob Black Sea last year, down by $198 per tonne, while hot-rolled coil (HRC) prices averaged $345 per tonne fob Black Sea, down by $177 per tonne on an annual basis. The Russian rouble exchange rate

averaged 61.19 roubles per US$1 in 2015, compared with 38.52 roubles per $1 in 2014. The Ukrainian hryvnya exchange rate averaged 21.82 hryvnyas per $1 in 2015, compared with almost 12 hryvnyas per $1 in 2014. However, the slump in steel prices dented the earnings of the CIS steel producers, outweighing the weakening of local currencies. For Ukraine’s largest steelmaker, Metinvest, earnings before interest, taxes, depreciation and amortization (Ebitda) slid by 63% year-on-year in the first nine months of 2015 to $813 million, the latest data at

the time of writing.NLMK posted 2015 Ebitda at

$1.95 billion, down by 18%. Evraz reported a 39% drop in its earnings to $1.44 billion last year. The earnings were further depressed by the narrowing spreads between finished steel and raw materials prices, NLMK said. Meanwhile, in Ukraine, the intensity of hostilities in the east of the country dropped last year, which allowed Industrial Union of Donbass (ISD) in June to restart its flat steel mill in Alchevsk, which had been idle since August 2014. So far this year, the country’s output has

been recovering, with rolled steel production increasing by 17% year-on-year in January-April to 7.22 million tonnes. The focus on exports remains, as consumption at home is still affected by economic instability. Steel consumption in Russia is expected to drop by 10-20% this year, as the price of oil has hit multi-year lows and the economy is struggling to emerge from recession. More producers from Russia and Kazakhstan were targeting billet exports in early 2016. However, more recently some CIS exporters have shifted their

focus back to finished steel sales, while reducing mainly slab and pig iron shipments, in order to focus on higher-margin products as their prices started to go up. CIS export prices for billet, slab and HRC grew by $175-225 per tonne during January-April 2016 to reach, on 2 May, $428 per tonne, $395 per tonne and $478 per tonne, respectively, all fob Black Sea, according to Steel First. However, export prices are expected to retreat in mid-year amid the usual summer slowdown in demand.

CIS Steelmakers Focus onSemi Finished Exports

After a long bout of bearish market sentiment, prices and profitability in the European steel industry have started to look up in the second quarter of 2016 – but the challenges are far from over. Crude steel production in the EU fell by 1.8% year-on-year in 2015, to 166.20 million tonnes, according to the World Steel Association. The decline was partly driven by the closure of Sahaviriya Steel Industries UK’s 3.6 million tpy slab plant in northern England last September, as low steel prices and shipments made the operation unviable. The same factors weighed on the profitability of several European steelmakers, most of which focused on efficiency and

cost-savings measures to get through last year’s market trough. Similarly, Luxembourgheadquartered ArcelorMittal, maintaining pole position in the top steelmaker’s list, saw its operating profit in its European business fall by 74% year-on-year to €145 million ($164 million) in 2015. However, weakened appetite for imports following several new anti-dumping probes into China-origin flat steel imports has seen domestic steel producers gain market share in the past few months, supporting price growth. ArcelorMittal has been at the forefront of driving recent coil price increases, with Steel First’s assessment for Northern European

domestic hot rolled coil at €400-430 ($451-485) per tonne on May 18, slightly up year-on-year and up by €100-120 ($113-135) per tonne from a low this January. European domestic and export long steel prices have also rallied recently. But increasing competition last year and a tighter import quota since early this year have restricted Southern European rebar sales to Algeria, the key market for Italian and Spanish mills to relieve some domestic overcapacity pressures. Trade issues have risen to the forefront of steel industry lobbying efforts in Brussels, disquieting some importers, and nearly by-passing worries over the costs of implementing the ambitious

Phase III of the European Emissions Trading Scheme. Amid intensified efforts to crack down on dumping, the European Commission initiated prior surveillance of most steel product imports at the end of April. Open anti-dumping investigations at the European Commission now range from China-origin high-fatigue performance rebar, HRC, heavy plate and seamless pipe to Belarus-origin rebar and Chinaand Russia-origin cold rolled coil. But as trade barriers against Chinese steel pop up around the world, the country’s largest steelmaker Hebei Iron & Steel has been making in-roads in Europe. It bought a majority stake in Switzerland-headquartered steel

trader Duferco Trading last June, acquired 98% of Serbian steelmaker Železara Smederevo in April, and in May has been rumoured to be among bidders for Tata Steel’s remaining UK assets that were put up for sale in April. Having also agreed to sell its UK long steel business to turnaround investment firm Greybull Capital in April, India’s Tata Steel – 11th in the global ranking – has dominated headlines over the past year as asset sales, closures and consolidation continue to generate discussion in Europe’s ferrous industry. IJmuiden will remain Tata Steel’s only European asset, once all its UK assets are offloaded.

EUROPE Optimism Amid Challenges

Output Falls in a Tough YearIn the Asia-Pacific region, as

elsewhere in the world, 2015 was widely considered one of the toughest years yet in the steel industry. Large and medium-sized steelmakers both had to cope with all-time high steel exports out of China, which were mainly destined to Asian nations given their geographical proximity. Flat or declining steel demand in their home markets and low selling prices compounded the problem. This was the case in Japan, where crude steel output dropped 5% in 2015 to 105.2 million tonnes, as local mills were forced to adjust their operations amid high domestic inventory levels and stagnant performances

in the local construction and manufacturing industries. In this environment, Nippon Steel & Sumitomo Metal Corp (NSSMC) produced almost 6% less steel, at 44.53 million tonnes. The Japanese mill ended up losing the No. 2 place it had held for the previous three editions of MB’s top steelmakers, to China’s Hebei Iron & Steel Group. It was a similar story for NSSMC’s closest competitor, JFE Steel, which reported a total group output of 32.41 million tonnes of crude steel last year, down almost 5% from 2014. The company blamed a “persistent oversupply of steel” for poorer financial results in the period. However, as China’s

Anshan Iron & Steel posted an even bigger drop in production, JFE Steel actually moved up one position in this year’s ranking, to No. 7. In South Korea, crude steel output fell 2.6% last year to 69.7 million tonnes, especially as local electric arc furnace (EAF) mills grappled with relatively high ferrous scrap prices as compared with the lower iron ore and coking coal costs enjoyed by blast furnace operators. According to the Korea Iron & Steel Assn (Kosa), around 7.6 million tpy of EAF capacity were taken out of the local market in 2014 and 2015, including both permanent closures and suspended operations.