Overview Of Iran's Steel Industry

By Author: Sinosteel Pipe
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1. Overview of Iran

Islamic Republic of Iran (Persian:جمهوریاسلامیایران, English: The Islamic Republic of Iran, abbreviated as Iran, Iran is an ancient civilization with a history of four or five thousand years. It is located in southwestern Asia and is known as the "European Land Bridge" and the "Eastern and West Air Corridor". It has an area of ​​1.645 million square kilometers, a coastline of 2,700 kilometers, and many plateaus in the territory. The east is basins and deserts, with a population of 88.55 million. Iran's GDP in 2023 is approximately US$401.5 billion, and its per capita GDP is US$4,500.

Iran has rich oil and gas and mineral resources, and is known as the "World Mineral Museum". It ranks fourth in the world in oil reserves and second in the world in natural gas reserves. Zinc ore reserves rank first in the world, with copper ore reserves of 3.3 billion tons, accounting for about 4% of the world's total reserves, ranking third in the world; iron ore 4.7 billion tons, ranking tenth in the world.

2. Overview of Iran's steel

Iran is the tenth largest steel producer ...
... in the world and the largest steel producer in the Middle East. The crude steel production accounts for more than 50% of the crude steel production in the Middle East. In 2024, Iran's crude steel production will be 31 million tons. "Vision 2025" was released in 2004, and the crude steel production capacity will reach 55 million tons by 2025.

Iran has rich iron ore resources, ranking tenth in the world. Iranian iron ore contains high silica content and coarse particle size. It is a good ore distribution variety. The direct reduced iron produced by it has strong competitiveness in the international market.

Iran is the second largest producer of direct reduction iron in the world (the first is India), with a production of 33.45 million tons, accounting for about one-quarter of the world's total output, and 90% of its direct reduction iron is produced through the Midrex process. Therefore, Iran's steel industry mainly adopts the direct reduction iron-electric furnace (electric arc furnace and induction furnace) process, accounting for about 90% of its total steel output, and only 10% of its capacity adopts the blast furnace-converter process.

There are nearly 100 steel companies in Iran, and almost all important steel manufacturers in Iran are fully or partly affiliated with the Iranian Mining Development and Reform Organization (IMIDRIO) under the government.

Iran's crude steel capacity utilization rate is slightly higher than the global average, but the steel capacity utilization rate is only 44.8%.

3. Iran's major steel enterprises

1. Mobarakeh Steel: Iran's largest steel producer and the largest long material manufacturer in the Middle East. It was founded in 1983 and is headquartered in Tehran. It has an annual production capacity of 11.8 million tons and has multiple production bases, mainly producing hot-rolled coils, cold-rolled coils, coated plates, etc. Their steel output accounts for about 50% of Iran, of which more than 95% are flat materials for automobiles. It also has Saba Steel and Hormuzgan Steel.

2. Esfahan Steel: Founded in 1994, it is headquartered in Isfahan. It mainly produces hot-rolled coil plates, cold-rolled coil plates, coated plates and other products, with an annual production capacity of about 4 million tons. It is the only manufacturer with large blast furnaces, and is also the largest manufacturer of steel structure products in Iran and the largest manufacturer of long materials.

3. Khouzestan Steel: Founded in 1986, it is headquartered in Avas. It mainly produces hot-rolled coils, cold-rolled coils, coated plates, etc., with an annual production capacity of about 5 million tons, occupying an important position in the Iranian steel industry.

4. National Iron and Steel Corporation of Iran (NISCO): Iran's largest wire and bar manufacturer, founded in 1994, headquartered in Shiraz, mainly produces wire and bar products of various specifications, with an annual production capacity of about 3 million tons. It has 5 steel mills under its jurisdiction.

5. South Kaveh Steel: The production capacity is about 2.4 million tons, and it also has a certain position in Iran's steel industry.

6. Iran's Zaland Steel Company (Zisco): In 2021, a blast furnace with a capacity of 1.7 million tons and corresponding converter steelmaking workshop were put into production, gradually making its mark in the steel field.

7. Khorasan Steel Company: Opened in the late 1980s in Khorasanlazavi Province, directly controlled by the Iranian Mining Development and Reform Organization.

4. Overview of Iran's steel import and export

Iran is also a net exporter of steel. In recent years, under normal circumstances, the annual export volume of semi-finished and finished steel is about 10 million tons. The destination countries for Iran's steel exports are mainly in the Middle East, Southeast Asia, Africa and Europe. China imports an average of 10 million tons of iron ore to Iran every year..

In 2024, Iran continued to increase the import of finished steel. The total amount of steel products imported by Iran from China reached US$8.7 billion, with Chinese products accounting for as much as 45%. The plate market accounts for the largest share of the total import tonnage, with annual imports of about 1.5 million tons. Iran imports steel and metal products for construction projects, infrastructure development and manufacturing. Steel beams, steel pipes and coils are one of the main imported products, driving growth in the construction and manufacturing industries.

5. The advantages and challenges of Iranian steel

A: Advantages:

(1) Oil and gas and mineral resources are abundant, most of which can meet production needs and rely less on external minerals, which makes Iran's direct reduction iron (DRI) production cost the lowest in the world (about US$200-250/ton), far lower than that of India (US$300-350/ton), which is dependent on coal.

(2) Iran has many steel plants and obvious production capacity advantages.

(3) Iran's DRI technology originated from the US MIDREX process introduced in the 1970s, but under long-term sanctions, the country has gradually realized technological autonomy. For example, Saba Steel's "Iranian version of Midrex" adapts to the characteristics of local raw materials. This process proves that even under the technological blockade, resource + market + policy support can still promote industrial upgrading.

B: Challenge

(1) External sanctions: The long-term sanctions of the United States have restricted exchanges and cooperation between Iranian steel companies and the international market, hindered the introduction of advanced technologies and equipment, and the development of Iran's steel industry has been greatly affected. Despite facing economic sanctions, Iran's steel production has continued to grow, with an average annual growth rate of 6% to 10% since 2008.

(2) Energy supply: The supply restrictions on electricity and natural gas affect the normal production of steel enterprises. Although Iran has abundant iron ore reserves, providing a foundation for the development of the steel industry, the country still faces the problem of supplying water, natural gas and electricity. In order to achieve a production capacity of 55 million tons of crude steel by 2025, Iran's annual steelmaking water consumption exceeds 250 million cubic meters, and natural gas energy consumption will also increase significantly. Since most steel mills in Iran use arc furnace technology to produce steel, this process requires a lot of electricity, and the tight power supply directly affects production capacity

(2) Cybersecurity: In recent years, Iranian steel companies have been hacked many times, resulting in accidents such as suspension of production and affecting production operations.

(3) Market competition: In terms of exports, Iran's long-material products are mainly sold to neighboring countries, while semi-finished steel is exported to the East Asian market. But in East Asia, Iran's semi-finished steel faces fierce competition from exported products from China.

6. Policy guidance for Iran's steel industry

(1) Core industry: The Iranian government regards the steel industry as a core industry that reduces oil dependence and breaks through sanctions.

(2) Suppress imports: In order to curb domestic dependence on imported steel, the government imposes heavy taxes on imported steel and cancels the loan policy of long-term preferential treatment for imported steel.

(3) Industrial upgrading: Accelerate the transformation of old enterprises, and the government provides financial support; implement privatization and transformation of steel enterprises, and build private enterprises with an annual output of 4-5 million tons of steel within 2-3 years. Steel market participants are reducing their dependence on foreign products by increasing capacity utilization. Mobarakeh Steel, the country's leading plates company, is working to expand its product range to provide specific grades of products, planning and producing products previously supplied from abroad, and producing more than 35 products over the past three years, among the main measures.

(4) Attract foreign investment: encourage foreign investment and give preferential policies, with no limit on the investment ratio, allowing foreign capital, profits and other interests to be transferred to Iran in foreign exchange or commodity form in accordance with the provisions of the investment license, and ensuring the freedom of foreign-invested enterprises to use and export goods produced, etc. Investors from the UAE, Türkiye, Afghanistan and Germany have the largest share of investment in Iran projects. China National Societe Group Co., Ltd. (NFC): It is the largest Chinese contractor in Iran's metallurgical engineering field. The cumulative contract amount exceeds US$5 billion, accounting for 40% of the share of Chinese companies in Iran's metallurgical projects. It will play an important role in Iran's metallurgical reconstruction.

7. Projects under construction and expected construction

(1) Sabasteel builds the second direct restore iron plant

On March 16, 2025, Sabasteel announced that it would invest 200 million euros (approximately US$221 million) to build its second direct restored iron plant to produce hot-pressed iron blocks (HBI). The project is led by the Iranian National Pension Fund and aims to significantly increase the production capacity of Saba Steel and enhance the strength of Iran's steel industry.

Saba Steel is located in Iran's Hormuzgan Province, about 13 kilometers from the Persian Gulf Mining and Metal Industry Special Economic Zone in the Port of Abbas. Its first direct reduction iron plant has a production capacity of 1.3 million tons/year. The new direct reduction iron plant project covers an area of ​​10 hectares with an annual production capacity of 1.76 million tons. It is expected to create about 400 direct employment opportunities and about 5,000 indirect employment opportunities for the local area. It is reported that the local area is also planning to build a special power plant to meet the power needs of Saba Steel's new factory and other industries in the region.

(2) Torbat Heidariye Iron and Steel Company promotes direct iron restoration project

Iran's Torbat Heydariyeh Steel is promoting the construction of the first phase of its new steel plant in Torbat Heydariyeh City, Korrasanlazavi Province, according to a statement from the Mayor of Torbat Heydariyeh City.

According to reports, the progress of the physical construction of a direct reduction iron (DRI) module with an annual output of 1.85 million tons has reached 71%. "The first phase of Torbat Hydariye Steel will be put into production next year (Iranian calendar; March 20, 2025 to March 20, 2026)," Mukhtaba Saujay told the Iran Student News Agency (ISNA).

It is reported that in addition to direct reduction of iron modules, the project of Torbat Hydariye Steel also includes the construction of a steelmaking workshop with an annual output of 1.45 million tons and a thin slab continuous casting and rolling (CSP) plant with an annual output of 1.4 million tons. The total investment of the new steel plant is estimated to be Iranian riyals 65 trillion (about US$1.5 billion).

(3) From Iran's Narizgadir Steel Company (NGHSCO)

The company has officially announced plans to increase the capacity of its direct reduction iron plant in Fars province. This initiative aims to further expand production scale and better meet the needs of domestic and foreign markets.

Specifically, NGHSCO's capacity improvement plan is divided into two stages. The first phase plans to increase the factory's annual production capacity from the existing 800,000 tons to 1 million tons, which is expected to be realized soon in the future. In the second phase, it is planned to further increase production capacity to 1.2 million tons to cope with the continued growth of the market.

(5) Jahan Foolad Sirjan Steel Company (SJSCO)

Jahan Foolad Sirjan Steel (SJSCO) has seen significant growth in production capacity, with the company's factory in Sirjan, Kermann Province, launching its second direct reduction iron plant of 1.05 million ton/year and a third direct reduction iron plant of 1.76 million ton/year in May 2024 and March 2025, respectively. So far, the company's direct reduction iron production capacity has reached 3.77 million tons/year.

(6) In 2024/2025, three provincial steel plants in Iran have good development momentum after completing the second phase of construction, and the arc furnace steelmaking workshop is put into operation. Nerizgadir Steel Company (NGHSCO) put into production of a steelmaking workshop with an annual output of 1 million tons in October 2024; Ghaenat Steel Company produced the first batch of steel billets through its six-circulating casting machine (capacity of 800,000 tons/year) at the end of January 2025; Shadegan Steel Company put into production of a steelmaking workshop based on a 140-ton arc furnace with a production capacity of 800,000 tons/year in March 2025. Each steel plant also has a direct reduction iron factory based on PERED technology and a production capacity of 800,000 tons per year.

(7) In July 2024, Faraz Foulad Dena Company (Dana Steel) opened a steelmaking workshop based on two 15-ton induction furnaces with a production capacity of 100,000 tons per year in Lazi Industrial City, Isfahan Province.

(8) Isfahan Iron and Steel Company (ESCO) has completed the refining capacity expansion project by equipping its 3.6 million tons/year converter steelmaking workshop with a new 130 tons No. 3 ladle refining furnace, further enhancing the crude steel production capacity. Overall, Iran's steel production capacity increased by 5.6%.

(9) Sarmad Abarkouh Iron and Steel launched a 450,000 tons/year wire rolling mill, increasing Iran's long-material rolling capacity by 1.3%. The rolling mill was put into production in September 2024 and can produce 5.5-16 mm of rebar and wire, which not only doubles the total rolling capacity of long materials, but also expands the product variety.

(10) West Asia Steel Company (WASCO) has opened its third cold rolling mill at its Salafchegan plant in Kum Province, increasing the production capacity of Iran's cold rolling coils. After the addition of this unit, WASCO's cold-rolled coil production capacity has been increased to 800,000 tons/year. In addition, WASCO is building a 250,000 tons/year galvanized and color coating joint production line, which is expected to be put into production by the end of 2025.

(11) At the end of June 2024, Foulad Yar Group officially launched a 260,000-ton annual hollow profile production line.

The completion of the above projects will increase the steel production capacity of Iran, among which the iron concentrate production capacity will be increased to 71 million tons/year, the pellet mineral production capacity will be increased to 74 million tons/year, the HBI/DRI production capacity will be increased to nearly 47 million tons/year, the crude steel production capacity will be 51.2 million tons/year, the long material production capacity will be 34.5 million tons/year, and the cold-rolled coil production capacity will be 5 million tons/year. It is inferred from this that Iran is about to achieve the crude steel production capacity target of 55 million tons/year in the "Vision 2025".

8. Iran's steel prospects are good

(1) Most of the young people:Median age is about 32 years old, the population under 30 accounts for more than 45%, and belongs to a "young society"

(2) Large production capacity: many steel mills and strong technical upgrade capabilities.

(3) Rich oil and gas and mineral resources: Rich resources can achieve the development of the entire steel industry chain.

(4) Price advantage: Rich resources and young labor make production costs lower.

(5) The Middle East market demand is strong:

The overall crude steel in the Middle East is in a state of supply and demand. With the vigorous development of infrastructure construction and downstream manufacturing in countries in the Middle East, the demand for steel consumption continues to increase. According to data from the World Steel Association, the apparent consumption of crude steel in the Middle East in 2023 was 58.234 million tons, and the major steel-producing and consumer countries Iran, Saudi Arabia and the UAE accounted for 36.09%, 20.75% and 13.15% respectively. Among them, Iran's apparent consumption of crude steel has always remained ahead. Although it showed a slight decline in 2020, it resumed growth since 21 and reached its highest point in 2023 of 21.018 million tons, a year-on-year increase of 2.5%; Saudi Arabia's crude steel consumption has been highly volatile in recent years, down 6% year-on-year to 12.086 million tons in 2023; although the UAE has the lowest consumption among the three countries, its growth in 23 years is the highest among the three countries, with a year-on-year surge of 1631% to 7.657 million tons.

As the UAE steel industry focuses more on meeting domestic construction needs and downstream processing products, coupled with the lack of raw materials, high dependence on imports of iron ore and scrap steel, the production cost of crude steel is relatively high. In recent years, the overall steel production of UAE has grown steadily, with the growth of steel bars and hot-rolled steel production particularly prominently, becoming the core driving force for the development of the industry. From 2020 to 2021, driven by the post-epidemic economic stimulus policies, steel production ushered in a period of rapid recovery, with the growth rate of major varieties significantly increasing and reaching a peak in 2022, with steel bar production reaching a year-on-year surge of 102.78%, and hot-rolled production increasing by 84.11% year-on-year.

Since 2020, Saudi Arabia's steel production has grown rapidly, and the construction of large-scale projects has entered a period of concentrated construction in 22 years, and the demand for construction steel has reached a temporary peak. According to the International Monetary Fund (IMF), Saudi Arabia's GDP growth rate will reach 1.5% in 2024, and it is expected to reach 4.6% in 2025. In 2025, Saudi Arabia's "Vision 2030" will still be the core driving force for the development of the steel industry. To achieve this vision, Saudi Arabia will invest hundreds of billions of dollars to develop large-scale tourism, comprehensive use and leisure development projects nationwide. Currently, there are 14 super-large projects under development in Saudi Arabia (including the NEOM project, the Roushan economic housing construction project, Medina Holdings and Saudi Entertainment Complex (SEVEN), etc.), of which the largest project is worth US$500 billion, involving the construction of a new futuristic city in northwest Saudi Arabia, namely the "NEOM project". The project occupies a core position in Saudi Arabia's "Vision 2030". According to estimates by many foreign media, the actual cost may exceed US$1.5 trillion, which is currently the largest construction project in the world. Manar Al Moneef, chief investment officer of NEOM, pointed out that the project is consuming one-fifth of global steel production, and demand in logistics accounts for 5% of the global logistics market.

Saudi Arabia currently has more than $1.15 trillion in future projects in progress, making it the largest market among all the GCC member states. Gulf countries have invested heavily in the field of infrastructure construction, and the demand gap in the Gulf region's building materials market in the future is relatively large. According to statistics, the Saudi building materials market is still dependent on foreign imports, with a proportion of up to 40-45%.
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