The competition of steel and petrochemicals in the common hall of electricity makes steel production uneconomic / gas restrictions threaten steel production in the coming months

The separation of the steel and petrochemical industries electricity hall has been proposed as a solution to improve steelmakers' access to energy, and as the cold season of the year approaches, concerns about gas supply and production continuity have also increased; But can this policy pave the way for steel production? The post of steel and petrochemical competition in the joint electricity forum makes steel production uneconomical / Gas restrictions threaten steel production in the coming months.

According to Ambassador Arjan, the energy imbalance has become one of the structural challenges of the F&L industry in recent years; This challenge, with electricity restrictions in the summer and pressure drop or gas cut in the winter, directly affects the production capacity, productivity of the production lines and the performance of the steel chain. In such a situation, the separation of the power supply hall of steel and petrochemical industries has been proposed as one of the energy market regulation policies.

To what extent can this decision help to improve the conditions of steel production? On the other hand, with the approach of the cold season of the year and the increasing sensitivity of gas supply in direct regeneration units, what factors does the prospect of steel production in the coming months depend on?

The difference in the cost structure and profit margin of the steel industry and the petrochemical industry has caused them to not have the same ability to pay for the purchase of electricity.

Reza Shahrashtani, a member of the Association of Alloy Steel Manufacturers, referring to the decision to separate the electricity supply hall of the steel and petrochemical industries, evaluated this step as a step towards improving the access of steelmakers to electricity and told Ambassador Arjan: The difference in the cost structure and profit margin of these two industries has caused them not to be able to pay the same amount for purchasing electricity. Therefore, the competition of steelmakers and petrochemicals in a common hall can raise the price of electricity to a level where the continuation of production is not economical for some steel units.

Emphasizing that the separation of electricity supply halls alone is not enough to achieve the goals of this resolution, he stated: the success of this decision depends on the supply of sufficient electricity, the transparency of transactions and the delivery of purchased electricity in accordance with obligations. If these conditions are met, it can be expected that the cost pressure of electricity supply on steel units will be reduced and the possibility of better planning for production will be provided.

The separation of the power hall does not solve the energy shortage of steelmakers / any limitation in gas supply can affect the supply of feed for steelmaking units and the performance of the entire production chain in addition to reducing the production of sponge iron.

This member of the Association of Alloy Steel Manufacturers stated that the isolation of electricity supply halls cannot solve the problem of electricity shortage in the country alone, and stated: This policy should be implemented along with increasing the electricity generation capacity and improving the energy infrastructure so that it can have a favorable effect on the activity of steel units.

Referring to the outlook for steel production in the coming months, Shahrashtani considered his assessment of the production situation to be cautious and added: With the reduction in electricity consumption due to less need for cooling systems, it is possible that steel production will improve relatively compared to the period of summer restrictions; However, entering the cold season of the year, gas supply will become one of the most important challenges facing this industry.

Emphasizing the vital role of gas in the steel production chain, he explained: Natural gas is not only used as a fuel in direct regeneration units, but also plays an essential role in the production process of sponge iron. Therefore, in addition to reducing the production of sponge iron, any limitation in gas supply can affect the feed supply of steelmaking units and the performance of the entire production chain.

The continuation of steel production depends on the stable supply of gas

Referring to the effect of managing energy restrictions on the production of steel units, this steel industry activist explained: If gas supply is carried out in a stable manner and possible restrictions are applied with prior notice and based on a specific plan, it will be possible to maintain the production level and compensate part of the production loss in the past months.

Shahrashtani further warned: On the other hand, if the restrictions lead to a widespread or long-term cutoff of gas, the risk of another drop in steel production will be serious. For this reason, until a specific plan for supplying energy to industries is announced, it is not possible to predict an exact percentage for the growth or decline of steel production in the coming months.

In the end, he emphasized the necessity of establishing stability in the energy supply of steel industries and noted: the main demand of this industry is stable and predictable access to electricity and gas so that production units can plan according to specific conditions for production, supply of raw materials and fulfill their obligations.