Billet
Billet price was downward during last week in Iran. 150 mm billet was priced at USD754 /mt on truck including 4% VAT in Anzali but transaction levels so limited. Billet market is depressed due to many factors including:
1-long products market depression
2-downward billet price in global markets
3-lower domestic billet compared to import market
4- Negative sentiment in the market and traders are worried about any restocking
As debar price has been freezed at under USD843/mt due to government controls, billet price should drop to under USD731/mt in Anzali including 4% VAT to be affordable for re-rollers. Due to production cuts of domestic mills and downward billet price in global markets, it''s likely that billet price would reach USD731/mt or lower during coming weeks.
In the coming months, cold weather and religious mourning in months of Moharram and Safar would make market silent and low in demand.
Long products
Long products prices continued declining and debar average price dropped by USD8/mt to around USD868/mt ex-work.
I-beam price fluctuated but reached last levels at the end of the week and is low in demand yet. Angle and channel prices were down by USD10/mt.
Iran sections market is being confused as at one side are the mills which are cutting production levels as high as 30% and some of them have stopped production completely. But at the other side, we see some mills are supplying in IME at low prices in hope of government supports.
As retail market price is not very higher than mills prices, so no one is interested in buying from mills for coming months'' delivery. In private sector, steel mills don’t feel comfortable in banking system after the current bank fraud and all the pressure is on the back of producers at the moment.
In demand side, nothing is positive. Seasonal factors will influence construction demand and religious mourning in months of Moharram and Safar will influence market as nobody will be interested in being active in the market. Global prices are downward and economical situation is not improving globally. So traders prefer to buy just for immediate needs.
If steel products prices increase in first quarter of 2012, with raw materials supply level so limited, Iran domestic market will improve too. Otherwise, if especially billet price stay at current levels, banks should find a way to get back the current credits as many steel market participants may not survive.
Flat products
Increasing supply of Mobarake Steel finally has moved Iran flat products market and HRC price of the mill has dropped by USD10/mt. But import market is influencing domestic market as a parcel of imported HRC of thickness 2.5-2.7 mm was transacted at USD38/mt lower than domestic producers.
Kavian and Oxin steel mills flat products were down by USD19/mt and when Oxin Steel increased supply in IME by Monday, market participants made themselves ready for more drops in this products price in coming future. It should be noted that Chinese 20 mm thickness HRC and higher at purchase price of USD800/mt would influence the market. Profit margins of traders would drop in coming Iranian month.
2 mm HRC price dropped by USD10/mt but its supply level is low. Besides global price of the material is dropping and is around USD720/mt cfr Anzali on cash payment.
HDG and CRC market were silent. An Offer of 3200 MT of Kazakhstan Origin CRC which has not been freed from custom office yet, has affected market sentiment, traders are more cautious. When the cargo reaches domestic market, prices will continue decreasing.
Based on Iran domestic market condition and downward prices in global markets, any improvement in flat products market seems impossible.
Iran Steel Service Center