Significant Decline in Iran's Steel Production Due to Electricity Shortages

Reports from Iranian steel companies indicate a sharp decline in their production in July of this year due to continuous power outages. Khuzestan Steel Company, the largest supplier of steel billets in Iran, reported a 42% drop in its steel production last month. The monthly performance report of this company shows that in July, it produced only 750,000 tons of steel products, which is not only 42% less than in June but also represents a 22% decrease compared to July of last year. Mobarakeh Steel Company and Kaveh Steel Company also faced declines of 5% and 27% in production in July compared to the previous month, respectively. Iran's electricity shortfall this summer has been greater than in the hot months of last year, and the government has severely restricted electricity delivery to industries. The steel industry in Iran requires 5,000 megawatts of electricity, while Iran's current electricity production is 61,000 megawatts and electricity demand is about 80,000 megawatts. The consequences of Iran's electricity shortfall include a 90% increase in cement prices and a halt in housing construction. Statistics from the World Steel Association for June also indicate that Iran's total steel production in that month fell by 21% compared to May, reaching 2.6 million tons. Although the statistics for last month, July, have not yet been released, the electricity imbalance in Iran last month was significantly greater than in June, and it is expected that Iran's steel production in July will experience an even larger decline. The steel industry in Iran is the only industrial sector that has seen relative prosperity over the past decade, and with the electricity shortage, this sector is also facing a crisis. Iran's steel production has increased from about 10 million tons in the late 2000s to 31 million tons last year, showing a growth of over 400%. Although the statistics for last month from the Iranian Steelmakers Association have not been published, spring statistics from this organization indicate that Iran's steel production in the first quarter of this year also fell by 2.4%, and even its exports faced a 19% decline. The importance of the steel industry, apart from supplying the domestic market, lies in its significant foreign currency earnings. Last year, Iran earned nearly $7.5 billion from the export of 15 million tons of steel and steel products, which constituted 15% of the country's total non-oil exports.