Auto Sector Recovery to Buoy Steel Consumption

Asre Khodro: The removal of sanctions provided an opportunity for Iranian automotive industry not only to recover but also reach new heights.

Saturday 23 July 2016 - 20:26:00

Auto Sector Recovery to Buoy Steel Consumption

Reporting "Asre Khodro", A large number of international car brands rush to come back to Iran, which will make the country the Middle East’s production hub in the coming years.
As a result, flat steel consumption in Iran is expected to grow, Metal Expert, a Ukraine-based provider of news and analysis on steel products and steelmaking raw materials industries, wrote in a recent report dubbed “Iran in Focus”.
Iran has a target to increase auto production to 3 million units per year and export 30% of it by 2025.
“Iran is a very promising market … Today it is more than 1 million cars and it has potential to go to 1.5 or 2 million,” Iran Business News quoted Carlos Gosh, the head of Renault-Nissan Alliance.
In 2015, vehicles production in Iran was little under 1 million units, which marks a 10% decline y-o-y. The decrease is explained by lower domestic market demand, as buyers were waiting for better prices and payment terms as well as fresher technologies after sanctions removal. According to market insiders’ assessments, Iranian automotive industry consumes around 600,000 tons of steel per year.
“Internal steel parts of each car are supplied by Mobarakeh Steel Company, while face parts are imported mainly from South Korea’s POSCO,” a trading source told Metal Expert.
The growth of steel consumption will be determined by production figures, though.
Renewal of cooperation with international automotive giants, such as PSA Peugeot Citroen, Suzuki, Fiat Chrysler Automobiles, Daimler, Renault-Nissan Alliance and Volvo is expected to enliven and modernize the Iranian industry.
According to the government’s plan, Iran is expected to limit Completely Built Unit imports while pushing for high localization.
“Supplier and Original Equipment Manufacturer partnerships will be the best mode of entry into Iranian automotive market,” an industry specialist said.
A bright example is a 50/50 joint venture agreement between the country’s largest manufacturer Iran Khodro and French PSA Peugeot Citroen. The joint venture is expected to invest up to €400 million over the next five years in manufacturing and R&D capacity.
The agreement, which will be backed by technology transfer and significant levels of local content, will come into effect around mid‑2016, while first vehicles are expected to roll off the production line at the Tehran plant in the H2 2017.
Fiat and Daimler, producer of Mercedes-Benz cars, are also in talks with IKCO for joint venture establishment this year.
A €300 million deal was announced on Thursday between the PSA Group and SAIPA for the former to produce and sell vehicles for its Citroen brand in Iran. The details of the agreement have been explained in a separate article on page 4 of today’s newspaper.
There is another opportunity to support local flat steel producers through export of spare parts. Recently, Iran signed a memorandum of understanding with Oman and Algeria for the establishment of joint ventures in these countries, which will require additional volumes of flat steel.
IKCO and Omani Investment Fund agreed to study the creation of Orchid International Auto. The total cost of the project is expected to be $200 million. It will start as assembly facility and move gradually towards manufacturing. Nevertheless, the type of vehicles and volumes to be produced were not disclosed. Cooperation with Algeria is eyed by Iran’s second biggest automotive giant SAIPA. Initially, about 20,000 units per year of SAIPA sedan will be produced there.
To feed the growing needs of automotive sector and other consuming industries, Iran plans significant flat rolling capacities expansion in the coming several years.
According to the data published earlier by Metal Expert, by 2019 Iran may see flats rolling capacities more than doubled to 23 million tons. Besides traditional supplier, Mobarakeh Steel Company, the market is eyed by Golgohar Iron and Steel Development Company, Arvand Jahanara Steel Company, Pars Kohan Diyar Parsian Steel Complex and Esfahan Steel Company.
To support local producers, Iranian government increased flat steel import duties, for automotive steel in particular, from 10‑20% to 20‑25%. To maintain the share in this narrowing market, POSCO established a joint venture with PKP to produce 1.6 million tons hot rolled coil and 600,000 tons of cold rolled coil.



برچسب ها

Iran Automotive Industry
مطالب مرتبط بیشتر
Construction of Chinese-Persian car in Semnan France to update firms on doing business with Iran S. Africa-Iran Business Forum Next Week Iran, Turkey to Hold Meeting of Joint Economic Commission Next Month French Businesses, Officials to Preempt American JCPOA Walkout Lack of Iran Khodro Capital Impedes Peugeot Plans Auto Parts Makers Demand Tougher Regulations on Imports Istanbul Automechanika Conference with the participation of the senior director of the exhibition European carmakers on the road back to Iran after nuclear deal Car from the new minister's perspective Iran Automakers Need Logistical Spread Iran Auto Output: All That Clamor for Naught French Leverage in Iran Auto Industry Iran Industrial Agency Kicks Starts Another Car Factory Iran Automotive Production Up 20% y/y With Sanctions Behind, Iran Looks Ahead Iran Carmakers Obliged to Offer 2-Year Guarantees Iran Auto Companies Not Raising Prices Iran to hit two car industry accords soon Turkey keen on investment in Iran's auto industry PSA to carry out Iran plans despite US threats Peugeot, Citroen Will Uphold Localization Segment in Iran Iran to release Euro V passenger cars next year Production surges in Iran's car industry Iran Khodro Group Retains 39% Market Share Iran to sign 5 auto deals with intl. companies by Mar. 20 Iran talks with Germany’s VW to produce passenger car Car Import only through Investment Iran’s Vehicle Initial Quality Study Released Iran has potential to be top-10 auto market by 2020 Iranian, Turkish companies discuss auto parts Coop. The 4th Vehicle Conference "Sales and After-sales Service Approach” Iran Car Sales Slump Despite Loans Iran’s Auto Import Report by MSD Iran Targets 80% Auto Localization Effects of Automotive Ties With China Faurecia builds on Iran ties to secure major deals - CEO Renault signs MoU with Iran to create new joint venture Peugeot to try for making Iran its manufacturing hub in Middle East, Africa Iran to ink new deals with foreign automakers Pakistan-Iran cooperation in auto sector discussed Iran to open car factory in Azerbaijan New Automotive Decisions Announced Iran's Automotive Advantages Friends with many benefits Encouraging foreign investment to revitalize Iran’s car industry - expert Iranian car output down 2.5% Y/Y Algeria-Iran: 15 cooperation and agreements for automotive industry Automotive Targets Highlighted How to seize Iran’s automotive opportunities VW In Iran Iran ranked 13th in world passenger cars sales of 2015 Bavaria eyes major auto supplier potential with Iran Plans Devised to Make Iran Region’s Top Automaker: Minister Iran Seeks Foreign Partnerships to Boost Auto Industry Volvo on the Final Decision to Manufacture Car in Chabahar 3rd Iran Automotive Industry Int'l Confab opens in Tehran Iran Inks 3 MoUs with Foreign Carmakers Iran signs three deals with foreign automakers Iran to become a hub for automotive manufacturing: OICA President Iran, Germany Ink MoU to Boost Cooperation in Automotive Industry How Iranian Cars Are Viewed Around the Region Peugeot to Compensate for Iran’s Losses in New Contract: Minister Minister Calls for Japanese Automakers’ Investment in Iran Iran seeking Japanese investment in autos, water Iran in Talks with Germany, Italy to Boost Cooperation in Automotive Industry Three Europe carmakers to return to Iran soon Iran to become world's 8th automotive manufacturer Iran suspends car loan programme on soaring demand Iran to export 30% of domestically produced cars French firms trail in economic rush to Iran - executive Iran interested in cooperating with German, Italian carmakers Nematzadeh defends automotive sector Changing Automotive Perception Italy to broaden cooperation on auto industry with Iran Iran: The next automotive hotspot in Middle East? Iran's car market ready to zoom in on the action Japan explores opportunities in Iran's auto industry Thailand hopes for boost in trade with Iran after sanctions get lifted
Back to top