**Steel Exports: A Victim of the Energy Crisis**

For several years now, industries have faced limitations in energy access during the summer and winter seasons; a restriction that has led to periodic factory shutdowns, causing severe impacts on production and the economy. This summer, as in previous years, the steel industry has been plagued by power outages and the associated challenges; an issue for which no solutions were devised, resulting in substantial production losses.

The steel industry, in particular, has experienced a chain reaction of problems in production, sales, and exports due to this crisis, suffering significant financial damages from these outages over the past few years. A review of the steel industry’s production statistics for 2023 shows a stark decrease in production between the second and first quarters of the year, highlighting the adverse effects of power outages on raw material supply, production, and lost revenue.

Beyond the immediate consequences for the industry and the broader economy, these outages threaten export revenues as well. With each repetition of this trend, steel companies struggle to meet their export commitments, damaging the industry’s credibility in the international arena. Given that a significant portion of non-oil export earnings comes from the steel sector, such limitations not only affect producers but also harm the country’s foreign exchange earnings. This underscores the urgent need for effective management to navigate these challenging seasons with minimal impact and to ensure a sustainable electricity supply.

In this context, a board member of the Steel Association stated in response to the question of why the steel industry has become a casualty of the energy crisis that the restrictions imposed have predominantly affected the steel industry due to an imbalance in the electricity supply. He noted that restrictions have been applied at a rate of over 90% relative to the working hours of this sector, causing a standstill in production.

Bahador Ahramian emphasized that despite the steel industry’s efforts to establish a power generation capacity of 4,000 megawatts—essentially its total consumption—the industry still faces power shortages. Consequently, the steel sector bears a disproportionate share of the limitations imposed, resulting in it being unfairly victimized.

He further stressed that the energy imbalance is a reality that has been in play since 2020, leading to a loss of 240 trillion rials (approximately 6 billion dollars) in capacity. While the steel industry requires 4,000 megawatts of electricity—a capacity that it has generated itself—other industries should also be doing the same, yet the restrictions on electricity and gas have mainly fallen on the steel sector.

Regarding the current state of steel exports, Ahramian lamented that exports have declined due to reduced production and that they have not surpassed last year’s peak levels. The main reason for this decline is the production reduction stemming from energy imbalances. He noted that without solutions, the industry would undoubtedly face new export limitations, particularly in the coming months when foreign currency shortages may arise.

**14% Decline in Steel Exports Amid the NIMA Rate and Power Outages**

Statistics released for the first four months of 2023 indicate a 14% decrease in the volume of iron and steel exports, influenced by the disparity between the NIMA exchange rate and the free market rate, as well as production declines due to power outages. The Iranian Steel Producers Association reported that iron and steel exports dropped to 600,000 tons, valued at 270 million dollars, representing a 14% decrease.

According to the released data, while exports from most rebar-producing factories have converted to domestic sales due to requirements for repatriating export earnings at the NIMA rate, the total exports of long steel products increased by over 19.5% by the end of July 2023. Specifically, rebar and angle sections saw increases of 21.7% and 20.1%, respectively, while I-beams experienced a 6.7% decline in exports compared to the same period in 2022. Additionally, hot-rolled sheets saw exports of 123,000 tons in the first four months, which dropped to 96,000 tons by the end of July, reflecting a 28% decrease.

The data indicates a significant drop in exports of cold-rolled and coated sheets by 52% and 24%, respectively. The total volume of flat steel product exports in the first four months of 2022 was 157,000 tons, which fell to 114,000 tons by the end of July 2023, representing a more than 27% decline. Overall, the volume of all steel product exports in the first four months of 2022 was approximately 1,082,000 tons, which increased to 1,219,000 tons in 2023, marking a 12.7% rise.

However, statistics show that Iran’s slab exports have sharply declined, with this product’s export volume in the first four months dropping to half of what it was during the same period last year, with slab exports down 23% from 868,000 tons to 460,000 tons. Furthermore, the volume of intermediate steel exports, including billets and slabs, saw a 23% reduction, equating to a decrease of 600,000 tons compared to the previous year. The volume of sponge iron exports during this period also dropped by 23%, whereas there were increases of 17% and 5% in exports of pellets and iron ore concentrates, respectively.