India has made amendment to its foreign trade policy lifting a ban on trade with Iran.
The lifting of sanctions has opened routes for FDI in Iran and investors are looking at Iran as a new destination. Iran plans to double its steel production by 2025 as it is now on the cusp of economic boom and is showing plenty of promise for Indian, Chinese, Japanese and western companies. Amid severe demand crunch, Iran could provide a sizeable opportunity for the distressed Indian ferro alloy industry.
The Indian Government announced through a notification that the prohibition on direct or indirect export to Iran or import from Iran is lifted. The decision came following the implementation of the Joint Comprehensive Plan of Action (JCPOA) January 16, under which most of western sanctions on the Islamic Republic were lifted.
According to the International Monetary Fund (IMF) the Iranian economy will expand 4.3% this year, with growth around 4% over the next two years. Iran’s imports are set to expand 18% in 2016. The deputy minister of Iran’s Ministry of Industries, Mines and Trade recently said that steel production in Iran is set to jump to 55 mnt by 2025 from 22 mnt this year. Iran has USD 29 billion of mining investments attracting interest of companies from Europe to Asia. Indigenous steelmakers in Iran are also expanding operations and India could find a potential market in Iran to export its ferro alloys for years to come.
Iran is the largest steelmaker of MENA (Middle East & Northern Africa) region. Major raw steel producers of Iran are the Mobarakeh Steel Mill, with approximately 47% of market share, followed by the Khuzestan Steel Company with about 23%, the Isfahan Foundry with about 20%, and the Iran National Steel Industries Group with some 10% of the market share.
Ferro Alloy Export from India to Iran
The total Indian ferro alloy export in H1 2016 (Jan-June) was 242,170 mt. Therein, primarily driven by exports of ferro manganese to the tune of 10,912 mt, the total Indian ferro alloy export to Iran in H1 2016 was 20,419 mt. Ferro manganese export to Iran was followed by export of 6,992 mt to Pakistan and 6,228 mt to UAE in H1 2016. A total quantity of 43,443 mt of ferro manganese was exported during Jan-June’16. Silico manganese and ferro silicon exports to Iran during the same period stood at 9,251 mt and 256 mt respectively.
Indian ferro alloy exports to Iran in June’16 decreased by almost 20% in comparison to May’16. In June’16, ferro manganese exports to Iran increased by almost 120% in comparison to May’16. Whereas, Silico manganese exports to Iran decreased by 65% in June’16 in comparison to May’16. Similarly, ferro silicon exports to Iran decreased by 81% in June’16 compared to May’16.
During Jan-June’16, the total silico manganese export was 189,529 mt. The highest quantity with a total of 38,834 mt was exported to Japan, 24,067 mt was exported to Taiwan and 23,046 mt was exported to Italy. Ferro silicon exports between Jan-June’16 were 9,198 mt out of which the maximum quantity of 2,470 mt was exported to Bangladesh.
Source: Steel 360 Magazine (August’16 Issue)
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