Iran steel industry hits hostile EU terrain

Iran’s steel industry is reportedly the latest target of a rising tide of protectionism in the EU, highlighting the bloc’s determination to further regionalize the market. 

Iran is among a number of countries which the European Union has threatened to hit with tariffs to check their exports of hot-rolled flat iron to the continent, media reports say.

Other countries facing EU’s preventive measures are Russia, Ukraine, Serbia and Brazil which are accused of selling their steel products at prices below cost in Europe.

According to the Official Journal of the European Union (OJ), the European Commission has opened a probe to decide whether hot-rolled coil from those countries “is being dumped and whether the dumped imports have caused injury to the union industry.”

The Commission has nine months to decide whether to impose anti-dumping duties for six months and 15 months to decide whether to apply “definitive” levies for five years, it said.

The hot-rolled coil market in Europe is worth about 10 billion euros ($11.1 billion). The key product is used in everything from cars to construction and is a monopoly of such companies as ArcelorMittal and ThyssenKrupp.

EU’s protective measures highlight a drive in the bloc to keep steel industry regionalized and maintain clout on its annual sales of 166 billion euros.

According to the European Commission, steel industry accounts for 1.3 percent of EU gross domestic product and directly provides 328,000 jobs.

The industry, however, is under strains from slowing global economies and its failure to cut production and therefore stem a growing supply glut. European steelmakers have shed 7,000 jobs since last autumn, Brussels-based trade association Eurofer said earlier this year.

The move against Iran and other countries is the latest in a series of EU’s protective measures that target mainly China, the world’s number one steel producer.

Weak domestic demand and excess capacity pushed China’s exports up 50 percent to a record 93.8 million tonnes last year. Lower rouble, meanwhile, has made Russia’s steelmakers far more competitive.

Iran, which is the biggest steel producer in the Middle East after Turkey, also plans to boost production as the nation is emerging from years of Western sanctions.

Iranian steelmakers are facing their own problems from unregulated imports, forcing the government to jack up tariffs on various steel products to 20 percent this year.

According to data from Iran Steel Producers Association, over 3 million tonnes of steel products were imported during nine months in 2015, indicating a rise of 86 percent against the similar period in 2014.

Officials say flat steel producers operated at only 53 percent capacity last year. For example, Mobarakeh Steel Company (MSC) cut down its production for the very first time in the company’s history.

MSC is Iran’s largest flat steel manufacturer where more than 45% of the country’s steel is produced.

The hike in steel imports coupled with the ongoing recession in the domestic construction sector has compounded Iranian steelmakers’ troubles. But they are heartened by a recent opening in the wake of a nuclear agreement.

One key bullish area is the automotive sector which is attracting foreign investors in droves in anticipation of a pent-up demand. French and Germany automakers have already clinched initial deals to resume lucrative business in the sector.

However, it is not clear yet how EU’s latest move to shut its steel industry to Iran’s exports would affect the two sides’ trade dynamics.

By Press TV