Iran’s iron ore pellet output cumulatively reached 21.24 MnT over seven months since the beginning of the current Persian year on March 21, which reflects an astonishing 36% rise compared to the same period last year, Iran’s Ministry of Industries, Mining and Trade has reported.
Production by the Gol-e-Gohar Iron Ore Mine, situated 55 km off the south-central city of Sirjan, increased by 15% to reach 7 MnT and that of the Middle East Mines Industries Development Holding Company (MIDHCO group) grew by 60% to hit 2.83 MnT during the same period.
Why Pellet Production is Surging?
What are the reasons behind this significant increase in output? A senior official of the Gol-e-Gohar Mining & Industrial Company said: “Iran has the largest capacity of iron ore mines in the Middle East and the country produced 21.7 MnT of crude steel in 2017 (the 13th largest steel-producing nation in the world). With an eye on producing 55 MnT of steel by 2025, the objective today is to balance the entire steel production chain to achieve capacity enhancement. We need to increase the capacity of iron ore concentrate, iron ore pellet and sponge iron plants which are required to reach 55 MnT crude steel production.”
Iran’s sponge iron (DRI) output increased 19% (since March 21) in the current year in comparison with the same period last year.
Gol-e-Gohar Mining and Industrial Company, as the largest producer of iron ore concentrate and pellets in Iran, should necessarily play a key role in achieving the stated target of steel production by 2025.
“Based on the strategic map, Gol-e-Gohar’s plan is produce 24 MnT of iron ore concentrate, 21 MnT of iron ore pellets and 5 MnT of type steel products,” the official said.
“Domestic demand and global steel market demand have led to increase in output. As a major mining company, Gol-e-Gohar is interested in increasing its market presence,” he said.
Will Production Rise Further?
So, will pellet production in Iran witness an unprecedented surge in 2019 because production capacity in the country is still way short of requirement? Steel making technology in Iran is primarily EAF-based and producers need sponge iron. Therefore, iron ore pellet capacity must be increased to maintain a steady stream of supply to DRI plants.
Iranian manufacturers and miners are of the opinion that the sharp uptick in pellet production will definitely continue in 2019.
Will Prices Rise, Too?
The impact on prices is one aspect to watch out for. From November 8, producers had to withstand the shock of prices plummeting by USD 40. The future depends on a) need of high iron ore supply in the MENA region, b) energy costs, and c) expansion in steelmaking capacity.
Pellet prices are directly dependant on steel price and demand and so it seems prices will remain stable in the near term and even rise marginally in the next few months.
3rd Indian Iron Ore & Pellet Summit
If you are keen to stay updated about the latest pellet production, export and price trends in Iran, make sure you attend the 3rd Indian Iron Ore & Pellet Summit to be held on 18 & 19 February, 2019 in Delhi NCR where Hossein Etminan, Sales and Marketing Manager, Gol-e-Gohar Mining and Industrial Company, will shed light on the emerging iron ore and pellet market scenario in Iran.