Billet
Price of billet size 150 mm dropped by around USD10/mt during last week in Iran market to reach USD789/mt on truck in Anzali including 4 % VAT. Supply level was as low as last weeks, sellers in shortage of cash, insisted on taking money before shipment. Any way demand was limited too.
Meanwhile it''s notable that in import market offer prices have been declining to around USD660/mt cfr Northern ports and should be lower than this level. But billet import level during 23 Aug-22 Sep dropped by around 40% compared to a month before. Besides due to current financial problems, import level of last Iranian month (23 Sep-22 Oct) would be very different from last months.
Import billet price in retail market should drop to as low as USD713/mt after custom duty ad VAT, then producing sections in current price levels would be logical as:
1- Billet price in global markets is downward
2- Sections demand in declining in Iran
3- Government policy for controlling long products prices has not changed
But if so, domestic billet producers should decrease their prices by USD95/mt. Which it is not easy, as it depends on scrap price too. Construction market is depressed and winter is coming, so by limited scrap collection, any drop in scrap price would be unlikely.
As a result it seems that the only solution for Iranian steel industry is cutting production level and waiting in hope of an increase in steel products prices or a drop in raw materials prices.
Long products
Long products market was so depressed during last week in Iran. Prices dropped by USD10/mt and demand level was limited too. Many mills have decreased supply level, but it didn''t support price levels as demand is scarce due to 2 main reasons:
1- Lower demand from construction projects
2- Wait and see policy of traders and avoiding any increase in inventory levels
Many market participants in Iran are worried about global economies slowdowns. Any one is waiting for November to see if demand for Q1 of 2012 would rise or not, which would be unlikely as financial problems in all over the world is being worse.
Although parliamentary election would influence market sentiment during coming months, as government policy is controlling inflation. This would make the situation in steel market difficult. Steel mills will have to cut production level as demand is dropping and they can''t afford decreasing their prices more.
It has been heard that some Iranian banks in Dubai have stopped discounting Usance LCs of Iranian banks. This would make import level drop more during coming months. This kind of LC is being used more for importing 2 mm HRC and billet which are raw materials for producing pipe and profile. As a result, a rise in prices of these precuts is likely in coming months.
Iranian importers will face difficult challenges during coming months and domestic producers would be affected too.
Flat products
Hor Rolled Coil 2 mm thickness, was priced about USD932/mt on truck in Anzali at the beginning of week 42, but was downward during the week to finish at USD922/mt including 4% VAT. Import offers are around USD750/mt cfr Anzali port. The current import prices are profitable for traders, so they are trying to conclude transactions at these levels.
As supply level is increasing and import prices are low, domestic prices should decline too. But the problem for discounting Usance LCs in Dubai and its effect on import level in coming months would make any possible rise in supply level under question. Some market participants believe that around 40% of HRC import has been done by Usance LC.
HRC up to 30 mm thickness had a quiet market. Limited supply of Kavian and Oxin Steel mills has made declines limited around USD19/mt for some sizes. But for sizes 6-15 mm, Mobarake Steel prices were downward as supply level in domestic and import market has increased.
CRC market was upset. Demand is very low and some sizes experienced a drop of USD20/mt. Because of limited supply, CRC and HDG markets are being influenced by import market. Import market is experiencing two different situations:
1- Global prices are coming down, therefore importers would prefer to sell more and buy cheaper material.
2- The current problem is banking affairs has made import level limited.
At the current situation, big traders would prefer to avoid stocks levels increasing. They would be more active in the market during coming month if the situation became clearer. Any rise in CRC and HDG market due to current market sentiment is unlikely.
Iran Steel Service Center