Power curbs worry Iranian steel mills, production may drop further

Iran's five steel mills are struggling with the sudden power outages which are likely to impact their production volumes. The Tehran Regional Electricity Organisation has notified the respective steel mills of restrictions on electricity from 22 Jan'22.

The five companies (including rolling mills, induction furnaces and pig iron producers) are - Rolling and Steel Parts Manufacturer Co, Industry Sarir Steel Co, Azarbaijan Pardis Trade Industry Co., Asia West Steel Co and Asia Bahman Chodan Steel Co. However, the steel majors in Iran haven't received any such notices yet and the production volumes haven't been impacted.

The main reason behind the restriction was the lack of liquid fuel (diesel) in power plants in the northern part of the country which has almost reached the critical range. Higher fuel consumption and supply constraints in Northern Iran amid cold weather have forced the government to curtail supplies to steel mills.

"Actually, those companies whose power demand was more than allocation have received the notice. But as the temperature in some parts of the country has dropped further, few other mills in Western Iran may also temporarily stop operations due to lack of gas handling," an Iranian source told SteelMint.

It may be recalled that Iranian steelmakers suffered electricity usage and natural gas curtailments in the scorching summer and winter seasons, respectively, which impacted the country's steel production.

Iran's production of finished steel in the first nine months of the current Persian Year (21 Mar-22 Dec'21) stood at 14.72 million tonnes (mn t), lower by 5% y-o-y as against 15.57 mn t seen in the corresponding period last year (CPLY).