Iran’s steel production drops sharply amid power shortages

Iran's crude steel production fell to 1.4 million tons last month, less than half of the country's monthly nominal steel production capacity.

he decline is attributed to a 25% power deficit this summer, which severely restricted electricity supply to energy-dependent industries, including steel mills, News.Az reports, citing Iranian media .

The sharp decline in steel production during the hot season is due to power shortages, a situation mirrored in winter months when gas shortages also lead to significant drops in production.

Iran's power and gas deficits have been worsening dramatically each year. Last summer, the country's electricity shortage reached 11,000 megawatts, rising to 20,000 megawatts this year. Additionally, Iran faced a gas deficit of 250 million cubic meters per day last winter, amounting to 25% of its winter demand.

The trend in declining production is undeniable. Data from the World Steel Association reveals that Iran's steel production in August dropped by 9.9% compared to the same month last year, 33% compared to August 2022, and a sharp 44% compared to August 2021.

Due to reduced operations and under-capacity production this summer, Iran’s crude steel factories have incurred an estimated opportunity cost of $1.5 billion, based on average global steel prices.

The sharp decline in crude steel production has also taken a toll on steel-dependent industries, particularly automotive manufacturing, which saw a 15% drop in production this summer. With a monthly capacity of 120,000 vehicles, the economic loss from this significant downturn in the automotive and parts sectors is substantial.

Additionally, a sharp drop in cement production this summer, also caused by power shortages, has doubled cement prices and halted construction projects across the country.

So far, economic and industrial authorities in the Islamic Republic have not released a report detailing the overall losses incurred by the country’s industries due to the significant electricity and gas shortages. However, some internal estimates, reflected in Iranian media, suggest that last year’s energy shortages cost the country about $8 billion.

News.Az