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Iran`s Foundry Market Size & Outlook

Issued at 2016-09-27



General Economy Situation

Economy size

Iran is the second largest economy in the Middle East and North Africa (MENA) region. Total Gross Domestic Product (GDP) has been reported as, $564.5 billion in 2011, which ranks as the 19th economy in the world. Iran economy and industry faced major decline due to the severe sanctions during past 6 years. For instance its GDP for 2014 has been declared as $404.1 billion due to international sanctions [1,2].

Iran has 9.3% of proven global oil reserves, 18.2% of proven gas reserves [3] and an abundance of strategic minerals including iron and copper ores.

The country also has a strong, but often overlooked industrial base. Especially when it comes to automotive, cement and steel industries. Iran`s automobile industry manufactured 1.6 million automobiles in 2010, and was ranked third in cement and, 14th in global steel production in 2014 [4-6].

Future Economy Outlook

Following two years of recession, the Iranian economy recovered during the 2014 Iranian calendar year (i.e., March 2014-March 2015) as the new administration led by President Rouhani took office in July 2013 and lifting of sanctions under the Vienna deal in June 2014. This sanctions relief included the removal of constraints on Iran’s oil exports, and the supply chain in key sectors of the economy—such as in the automobiles industry—and on international and domestic banks’ international transactions. The economy expanded by 3 % in 2014, on the heels of annual economic contractions of 6.6 % and 1.9 % in 2012 and 2013, respectively. [7]

With lifting sanctions by the beginning of the 2016 Iranian calendar year (March-June 2016), real GDP should rise to 5.8 % and 6.7 % in 2016 and 2017, respectively, as oil production reaches 3.6 and 4.2 million barrels per day[7]

The Iranian oil sector will not be the only beneficiary of lifted sanctions, as Iran gains high competitive abilities in a number of economic sectors, such as heavy industries and automotive. Therefore, with the lift of sanctions, the auto production will return to its previous rates (1.6 million cars in 2011) [8]. 

Foundry Industry in Iran

Industrial Foundry Production in Iran Started in the early 1950s.More than 1250 foundries are active in production of Ferrous and non-Ferrous  alloys castings. More than 90% of the castings are produced in big and medium foundries, and 10% are produced in small  foundries. Big  foundries have annual capacity from 15,000 to 80,000 tons and small size foundries less than 500 tons[9]

Iran `s foundry industry benefits from relatively low energy price and  yet experienced working force. There are big iron foundries supplying high quantity demands of automobile and other industries. Steel foundries are able to cast about 200,000 MT of castings annually. There are many medium and small size foundries which could supply high alloy steels, special stainless steels, high alloyed cast iron and nickel alloys.

Recent sanctions have affected Iranian foundries adversely like its related industries such as automobiles and caused trouble in implementing new technologies, lead them suffering low productivity and increased costs of production and decreased their export capacities. 

Capacity of Production in 2014 (Metric Ton)

Grey Iron                                        400,000 MT

Ductile Iron                                    200,000 MT

Ductile iron Pipe                            220,000 MT

Steel Casting                                  200,000 MT

Aluminium Production                 430,000 MT

Al Casting                                      85,000 MT

Al cable, Wire, Rollings               195,000 MT

 

                           Table2. Real Foundry Production in Iran

Year/Alloy      Gery Iron        Ductile Iron*        Steel     Aluminium      Copper base

1993              195,000           120,000           16,000      17,500             18,000

2010              395,000           250,000           68,000      39,000             39,000

2011              370,000           230,000           65,000       37,000            36,000

2012              230000            200,000           70,000       45,000            30,000

2014              200,000           170,000           60,000       50,000            28,000

*Ductile iron including ductile iron pipe

 

     Aluminium Industry in Iran (2014)

Al Production                          400,000 MT

Al Casting                               50,000 MT

Cable, Wire, Rollings             106,000 MT

                     Fig1. Foundry Productions in Different Sections

 

                  Fig2. Foundry Productions in Different Districts

 

 Industry Outlook

The overall passenger vehicle market is expected to grow to 2.3 million units by 2022, more than double from its current numbers. The small-car segment, which is virtually non-existent in Iran, is expected to sell over 250,000 cars annually in 2022 as per Frost & Sullivan research, driven by the urban middle class[10].

 

In the Mining Industry it has been planned to reach the following production in 2025 :[11-15]

 

Product                   2013 (million MT)                 Vision 2025

Steel                                   15.4                                         55

Copper (Cathode)              0.189                                      0.8

Aluminium                          0.295                                     1.5

Cement                                 75                                        130

Conclusion

Iran is a rich country in the case of resources such as oil, gas and minerals. It also has big industry infrastructures such as automotive industries. Due to the recent sanctions there was a decline in the growth of these industries. Lifting Sanctions causes removal of constraints on Iran’s oil exports, and the supply chain in key sectors of the economy—such as automobiles industry—and on financial transactions. This would help improving investment and joint ventures in different industrial sections such as automotive, steel, mining, petroleum etc. This would cause an increasing demand for castings related to these industries. So in middle time (3-5 years) Iranian foundries would grow steadily to meet these demands.

 

References

[1]. "GDP per capita (current US$)," The World Bank, 2015. [Online]. Available: http://data.worldbank.org/indicator/NY.GDP.PCAP.CD. [Accessed August 2015].

[2]. http://www.indexmundi.com/iran/gdp_per_capita_%28ppp%29.html

[3]. "Statistical Review of World Energy 2015," BP Group, June 2015. [Online]. Available: http://www.bp.com/content/dam/bp/pdf/Energy-economics/statistical-review-2015/bp-statistical-review-of-world-energy-2015-full-report.pdf. [Accessed July 2015].

[4]. Defterios, "Iran deal could unlock huge economic potential," 1 April 2015. [Online]. Available: http://money.cnn.com/2015/04/01/news/economy/iran-nuclear-deal-economic-potential/. [Accessed August 2015].

[5]. "WORLD STEEL IN FIGURES 2015," WORLD STEEL ASSOCIATION, July 2015. [Online]. Available: https://www.worldsteel.org/dms/internetDocumentList/bookshop/World-Steel-in-Figures-2014/document/World%20Steel%20in%20Figures%202014%20Final.pdf. [Accessed August 2015].

[6]. https://www.linkedin.com/pulse/iran-foundry-industry-outlook-2015-mehrdad-shirani?trk=prof-post&trkSplashRedir=true&forceNoSplash=true

[7]. http://www.worldbank.org/en/country/iran/overview#1

[8]. "Iran's economic potential after the nuclear agreement," The Regional Center For Strategic Studies, April 2015. [Online]. Available: http://www.rcssmideast.org/En/Article/205/Irans-economic-potential-after-the-nuclear-agreement-#.VdqR0fmqqkp. [Accessed July 2015].

[9]. http://www.emcasting.com/?en/pages/2/65/Iran-Foundry-Industry.html#cWc4q1cT5cOX7vPc.99

[0]. http://www.forbes.com/sites/sarwantsingh/2015/08/11/iran-automotive-industry-can-american-car-manufacturers-overcome-chinese-resistance/

[11].https://www.researchgate.net/publication/260165110_Iran_mining_industry_based_on_the_20-year_perspective_2025

[12]. "World Steel Statistics data 2013" (PDF). World Steel Association. 23 January 2014. Retrieved 4 February 2014.

[13] http://www.numov.org/de/publication-al/doc_view/1301-iran-mining-industry

[14] http://theiranproject.com/blog/2015/08/05/iran-seeks-to-double-steel-production-by-2025/

[15] http://en.iccima.ir/news/iccima-news-bulletin/iran-economy-bulletin/item/8145-iran-4th-global-cement-producer.html


Source: FRM co



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