گزارش تحلیلی بیزینس مانیتور- صنعت فلزات در ایران- سه ماهه دوم 2014

BMI Industry View

The outlook for Iran's steel sector remains poor; however, there are a few signs of light given the election of Hassan Rouhani and possible moderation in tone towards the West which could result in a reduction in sanctions on the metals  sector. On the whole, however, we are far from sanguine given our bearish outlook for steel prices and the fact that  any rapprochement with the West, if indeed it happens, will be drawn out and not have a significant impact in the near  term. We note with scepticism, Iran's plans to increase its steel capacity from 20mn tonnes per annum (mntpa) to  55mntpa by 2025, as well as a tripling of aluminium smelter capacity to 1.5mntpa.

While a cut in external trade has impacted negatively on the steel industry, isolation has ensured that imports have also been restricted. However, domestic industrial deficiencies in certain market segments mean that Iran will struggle to meet its own needs in spite of declining consumption. Crude steel output rose 11.1% year-on-year (y-o-y) to 13.27mn tonnes in the first 11 months of 2013, representing one of the strongest growth rates in the world, rivalling Turkey's.

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بیزینس مانیتور- صنعت زیرساخت در ایران - سه ماهه دوم 2014

BMI Industry View

BMI View: Our outlook for the Iranian construction industry in the short- to medium is turning more optimistic. Although we estimate there was a contraction of 1% in real terms in 2013, we forecast the industry to grow by 1% in 2014 and by an average of 3.8% over the next five years. Our more positive outlook is based on reduced economic sanctions from the West with regards to Iran's nuclear programme, low base effects, and a high demand for infrastructure projects. There are, however, high risks associated with the country's challenging macroeconomic picture and its weak business environment.

The Islamic Republic remains a country of pronounced risks, including political instability, economic challenges and social tensions, and we believe the current situation is unsustainable in the long term.

Despite a spike in oil prices, the latest wave of US energy sanctions and the EU oil embargo have taken its toll on Iranian oil production and consequently the economy at large. With the oil and gas industry accounting for an estimated 70% of the country's total exports, the government will be forced to cut public spending further.

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گزارش تحلیلی بیزینس مانیتور-صنعت فلزات در ایران-سه ماهه اول2014

BMI Industry View
The outlook for Iran's steel sector remains poor; however, there are a few signs of light given the election of Hassan Rouhani and possible moderation in tone towards the West. On the whole, however, we are far from sanguine given our bearish outlook for steel prices and the fact that any rapprochement with the West, if indeed it happens, will be drawn out and not have a significant impact in the near term. We note with scepticism, Iran's plans to increase its steel capacity from 20mn tonnes per annum (mntpa) to 55mntpa by 2025, as well as a tripling of aluminium smelter capacity to 1.5mntpa.

While a cut in external trade has impacted negatively on the steel industry, isolation has ensured that imports have also been restricted. However, domestic industrial deficiencies in certain market segments mean that Iran will struggle to meet its own needs in spite of declining consumption. Crude steel output rose 11.1% year-on-year (y-o-y) to 13.27mn tonnes in the first 11 months of 2012, representing one of the strongest growth rates in the world, rivalling Turkey's.

Read more here ...

گزارش تحلیلی بیزینس مانیتور-صنعت زیرساخت در ایران-سه ماهه اول2014

BMI Industry View

BMI View: We currently maintain a short-term bearish outlook for the Iranian construction sector. Although official data has not yet been published, we estimate a contraction in the industry in both 2012 and 2013 at 1.6% and 1.0% respectively. This is the result of a challenging macroeconomic picture, international sanctions and a prohibitive business environment. We are, however, more optimistic over the medium-to-longer term as an improvement in economic conditions should bring some respite for the sector. As such, we expect moderate growth to return in 2014 at an estimated 1% in real terms and an average of 3.5% between 2015 and 2022.

 

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گزارش تحلیلی بیزینس مانیتور- صنعت خودرو در ایران - سه ماهه دوم 2014

BMI Industry View
The medium-term outlook for Iranian auto production remains cautiously optimistic, reflecting the temporary deal reached between the US and major powers over the future of its nuclear programme in November 2013. BMI's Country Risk team's core view remains that talks will continue over the coming years, with the potential for a long-term agreement to be found, although we cannot preclude a breakdown in talks over the coming quarters, which could unleash a Western military response. Over the very near term, there is the chance that the six-month interim arrangement agreed in November 2013, which expires on July 20 2014, could be extended by an additional six months should both parties agree.

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گزارش تحلیلی بیزینس مانیتور-صنعت خودرو در ایران-سه ماهه اول 2014

BMI Industry View

The medium-term outlook for Iranian auto production has improved significantly since our last quarterly update, reflecting the temporary deal reached between US and major powers over the future of its nuclear programme in November 2013.

Iran and the 5+1 powers (the United States, Russia, China, France, Britain and Germany) clinched an interim  deal on the Islamic Republic's nuclear programme on November 24, following four days of negotiations in Geneva. Under the agreement, which will last for six months while a more permanent and comprehensive settlement is found, Iran will curb some of its nuclear activities in return for an immediate gain of approximately US$7bn in sanctions relief. US President Barack Obama called the deal 'an important first step toward a comprehensive solution that addresses our concerns'.

Should a permanent deal be struck in 2014 - and there is no guarantee that this will happen - then there is scope for sanctions on Iran's key oil sector to be lifted, which would be a game changer for the domestic economy and, by extension, demand for new cars from Iranian citizens.

Already, French carmaker Renault has announced that it plans to resume the export of car parts to Iran. The company is awaiting clarification on the relaxation of trade sanctions against the country. Clarification of the rules is expected around January 2014. Moreover, while the details of a deal to ease sanctions on Iran are still to be finalised, we believe that fellow French carmaker PSA Peugeot Citroen is already in line to be a major beneficiary. Having been one of Iran's leading foreign brands before sanctions were tightened, a return to the market for Peugeot would help to offset the ongoing slump in the group's European business.

Among domestic automakers, Iran Khodro Company (IKCO) is also likely to benefit from the potential return of its former partner Peugeot, although the domestic carmaker had been making progress i producing its own components for models, such as the Peugeot 206, following the French firm's withdrawal. Local production of Peugeot models in September and October 2013 topped 10,000 units a month for the first time in three years. According to data from the Iran Vehicle Manufacturers Association, the Peugeot Pars claimed second place in terms of output in October 2013, with 10,533 units produced. In total, we still forecast a 50% decline in vehicle production in 2013, however.

Another positive response to the deal for the wider industry was the 2% appreciation of the rial on the news that an agreement had been reached. BMI has previously highlighted the weakness of the rial as another source of pressure on domestic vehicle sales, which means that any further strengthening in the currency would be positive for consumers. That said, this initial strengthening is a drop in the ocean compared with the value lost over the last year or so and we would need to see further progress for this threat to sales to be totally overcome.

Indeed, there remains a great deal of 'wait and see' sentiment in the industry, until the full details of future operating in the Iranian market have been made clear. South Korea's Kia Motors, which had a partnership with domestic producer SAIPA until it withdrew from the market in 2010, said it will wait for more information before commenting. Germany's Daimler, which used to have a 30% stake in a diesel engine joint venture with IKCO before starting to cut back its Iranian business in 2010, said it will 'closely monitor' the situation, but has no plans to return to the market.

In a further encouraging development, in December 2013 it was reported that more than US$1bn in foreign direct investment has been approved for Iran's automotive manufacturing industry, according to the head of the Organisation for Investment, Economic and Technical Assistance of Iran, Behrouz Alishiri. Some US $300mn has already been invested. The government wants to turn Iran into an automobile production hub by extending legal support and special privileges to overseas investors. Alishiri says the government will provide a long-term plan to the Iranian automobile sector to help find reliable foreign investors.