Iran 2017 | INDUSTRY & MINING | B2B

Iranian steel producers are showing the same flexibility and gravitas in a newly buoyant international market, benefitting industry and global consumers alike.

Ahmad Sadeghi
Managing Director
Esfahan Steel Company
Hossein Keshaei
Managing Director
Mahan Sepahan Steel Company

What has driven your success up to the present?

Ahmad Sadeghi Esfahan Steel Company was established 50 years ago and was producing within four years. It had many years of high-quality steel production in Iran; we exported to China and other countries, but then lost our technology, and production stopped in Iran for many years. During the war we tried to operate a plant we bought from a German company, but equipment coming into Iran was attacked by Europe and the US, and we lost the plant. Our plant was the base for Iran to improve its steel technology when it was established. This positively affected many industries in Iran, both related and unrelated to steel. Iran had petroleum technology for many years prior to our establishment, but the industry has seen no improvement. Once we started our operations, it helped to improve the country's petroleum technology and numerous companies were created to support this industry. Our establishment was the point at which Iran first started to become industrialized.

Hossein Keshaei Mahan Sepahan Steel Company is located in Mobarakeh Industrial Town and has an annual production capacity of 300,000 tons. We manufacture construction profiles and steel pipes and have 12 years of experience in the field. We produce two to 12-inch diameter pipes and are among the best in the country in the volume and quality of these pipes. Our market share in this product category is 30%, and we have exported in the past few years. To further develop our product scope, we are planning to produce 24-inch pipes, which are used in gas, oil, petrochemical, and water transportation. Our key competitive advantage is our quality, which meets American Petroleum Institute (API) standards. For Mahan Sepahan Steel Company, 50% of the production process is producing the physical pipes and the next 50% is for testing the quality in our labs. This is what we are really focusing on in our management. We have many different kinds of tests, such as hydro, ultrasiline, and endocrine, all of which are necessary to ensure certification. In addition to this, we have pipe registry software that tracks the development of the product from the start of production to delivery. Every single pipe has an ID that shows the details of its production process, the materials, production date, and testing details that it has been subject to. All the pipes we export have a two-year guarantee.

What are your biggest activities currently?

AS Initially the aim of the company was to produce construction steel. This changed after the Islamic Revolution when the government decided to create other companies, and our expansion of operations stopped. When I joined the company, we started to increase our capacity and develop new products. I established a plant for flat products near our existing Esfahan plant. We will probably lose some market share going forward because we have many private sector competitors, and it is difficult to compete with them. Therefore, our strategy is to continue producing high-quality materials and expand the types of products we produce. Next to the production of construction materials, we successfully expanded into the production of rail products with the opening of a new plant in 2016. Now we are producing tracks for metro and train systems and have started producing other high-quality materials, such as high-quality steel bars for machining. Our plan is to increase both the quantity and types of steel materials we produce, especially the big rod bars used for pipelines. These are especially needed in this region, and our prices are good. Diversifying into other products is useful for us. When there is a slowdown in the building and construction industry, we will still have opportunities to sell our products to other sectors.

HK We are planning to focus on exports given the good timing for the country. There are two ways to meet the world's energy demands; the first one is to transport gas to people's homes and the second is through generating electricity. We are focusing on countries that work with the first approach, such as Iraq, Turkmenistan, Afghanistan, Kyrgyzstan, Azerbaijan, Oman, the UAE, and Kuwait. The current steel production capacity of the country is 18 million tons per year and expected to reach 55 million tons after the 20-year national vision. This requires huge investments, and foreign companies should finance part of these. We are currently negotiating with big financing companies to attract investment for every industrial sector, not only steel. We can use this investment to increase our production and use these products in Iran or abroad. We are not only looking for financing, but for knowledge and technology to further adapt ourselves to global standards.