Billet
A rise in exchange rate made billet price upward during first days of last week. Size 150 mm started the week at USD749/mt on truck in Anzali including 4% VAT, by Monday it reached USD765/mt , then dropped again and finished week 45 at USD758/mt. Low quality material was found at lower offer prices.
Lack of demand and sluggish long products market is affecting billet market. Besides other factors such as exchange rate and problems for opening LC have made buyers lose confidence for new purchases. As import billet price in Anzali is around USD640/mt on cfr basis, lowest cost price of the material would be USD721/mt after custom duty and VAT, so the amount of profit traders would get is around USD28-33/mt. It should be mentioned that trading in billet market has high risk at the moment. As a reason, traders would prefer to use this investment in other markets such as exchange or gold market, which has so much lower risk and more profits.
Based on the current market sentiment and the cold weather coming earlier than every year in the country, coming months would face lower scrap collection and so shortage of billet in Iran domestic market.
Long products
Last Saturday Iran section market get some confidence, debar price rose by USD3/mt, but I-beam price was downward. Channel price increased by USD5-10/mt and angle almost stable. By Sunday this sentiment continued but angle and I-beam price were down. But by Tuesday all sections prices started dropping. By end of the week, price of some sizes of Channel improved but debar and I-beam were downward.
It is clear that sections prices have reached the bottom in Iran market. Current prices are not affordable for mills, especially mini mills which should buy billet for producing debar. But main problem is lack of demand. Market players cannot afford buying long products at all. Scarce demand and lack of liquidity is common problem for every trader, so producers are forced to work at lowest capacity which would increase their production costs.
Like billet market, section market participants prefer to invest in exchange and gold market at the moment, which would increase liquidity shortage of mills more and more each day. If the current market sentiment doesn''t change in coming months, supply level would decline as steel products are mostly not profitable, neither for producing nor trading.
Downward trend of prices in global markets has been stopped or became slower. Producers mostly are avoiding more drops in prices, prefer to cut production level and are waiting for new orders of first quarter of 2012 within next 2 weeks.
Foreign traders are working so cautiously with Iranian importers. Generally market participants do not expect any improvement for Iran market in coming month and year 2012. At the moment lowest offer price for billet in Iran import market is USD640/mt cfr Northern port based on LC payment and for debar about USD720/mt cfr Iranian ports. Chinese I-beam has been offered USD740-750/mt cfr Southern ports.
Flat products
2 mm HRC price was upward during last week in Iran and reached USD891/mt on truck in Anzali including 4% VAT. By Tuesday after Eid Al-Adha, market was depressed and transaction levels limited. Mobarake Steel flat products prices were stable, but imported 8-15 mm thickness HRC was by USD47/mt cheaper than this producer''s price. Oxin Steel and Kavian Steel mills flat product prices were stable too but just thickness 15 mm price increased due to limited supply. Supply level in limited but demand is scarce too. Global HRC price is downward but Iranian buyers are cautious because of exchange rate fluctuations. They prefer not to buy in import market.
In CRC market, supply level was limited but demand level is low too. Some sizes from imported parcels like 2 mm CRC transacted at USD1015/mt including VAT in Anzali.
HDG market is in low supply but ageing it has limited demand too. It price was unchanged during last week.
2 mm HRC from Kazakhstan sellers is offered around USD710 /mt cfr Anzali.CRC offer price in import market is around USD750/mt and HDG is about USD810-840/mt, but sellers prefer not to deal on LC payment with Iranian sellers. After importing, prices would be higher than current market prices and this has made import level very limited.
Iran Steel Service Center