Billet
Billet market was almost stable during last week in Iran. It was priced at Rials10, 600,000/mt on truck in Anzali for size 150 mm including 5% VAT and experienced very small volatilities till end of the week. Traders didn't work much during last week. Import level has dropped due to LC opening problems so they are not interested in selling at the moment. Market sentiment was positive about nuclear negotiation between Iran and G5+1, so sellers stopped offering, besides sections market was depressed and buyers were not in hurry to buy too. Generally last week steel billet market was in waiting policy to see what would be the results of negotiations.
During last Iranian month (20 April- 20 May) billet import level dropped by 33% to 194,159 MT compared with 285,817 Mt of first month of current Iranian year. Market depression and lower prices in global markets have made current month import level expectations downward.
At the current situation that government is controlling sections price at IME, traders would prefer to buy long products from IME and stop buying billet, unless LC opening problems are solved. If so they would make profit by importing billet and selling in domestic market.
Long Products
Lack of demand and waiting policy of buyers made long products market quiet during week 21 in Iran. Steel mills and traders didn't decrease prices. Buyers were also waiting for final results of negotiations in Baqdad, hopeful about lower exchange rate. But on Wednesday market sentiment changed and it was active on Thursday. Generally sections prices were stable during last week in Iran. Average price of debar diameter 8-32 mm was around Rials 12,611,000/mt in Ahvaz and at the end of the week was transacted at Rials 12,610,000/mt. In Isfahan, Debar dia 16-25 mm changed from Rials 12,940,000 to Rials 12,783,000/mt . I-beam price increased on Sunday but start dropping from Monday onward.
Iran imported 6,710 mt of I-beam during first Iranian month of the year but it changed to 30,964 mt during last Iranian month (20 Apr- 20 May) which is for sizes 22 or higher. At the moment importers mostly are not interested in dealing as it would take time to sell it in Iran market.
Main problem of section market is New Year budget which was announced last Wednesday, if implementing budget starts very soon, it would help long products market improve. If not, section market will be in trouble as supply level is higher than demand.
During last 2 weeks of the first Iranian month (7-19 April) which is the first active working days of New Year, around 136,190 mt of sections were transacted at IME but during second month it was just 255,701 mt, if this trend continues, expected sections sales level at IME in current Iranian year would be around 3.5 million mt, which is a big problem for steel mills.
Flat products
HRC 2 mm thickness was priced at Rials 10,150,000 /mt on truck in Anzali including 5% VAT, but prices were downward till end of the week besides declines in demand level. On Thursday market react positively to Iran - G5+1 negotiation in Baqdad. It should be noted that HRC import level during last Iranian month dropped from 236,639 mt to 132,143 mt which means 45% decrease. Importing HRC at USD650/mt cfr Anzali would be profitable but the main problem of opening LC has squeezed traders liquidity, so any significant improvements in import level during current Iranian month seems unlikely.
HRC size 3-15 mm from Mobarake steel mill was almost stable and also buyers were not interested in dealing. HRC price form Oxin and Kavian Steel mills started the week upward but it was again downward from Sunday onward. Transactions levels dropped too. Imported CRC parcels are in shortage but besides lack of demand do not let prices improve. Some sizes of Mobarake Steel products especially thickness 0.80-1.2 mm dropped too. Importing CRC is very profitable for Iranian traders but not at the current situation with low demand and LC opening problems. CRC supply level during last Iranian month in IME increased from 25,150 to 93,390 mt. If its supply level increases, prices would decline too.
HDG market was quiet, some sizes are in shortage but waiting for nuclear negotiations and also limited CRC import level has made any improve in HDG market almost impossible.
At the end of the week market reacted to negotiations positively, exchange rate dropped and buyers started transacting in the steel market. Besides, importers stopped ordering and it affected IME transactions too. As the negotiations would continue at the end of current month (around 3rd week of June) waiting policy would continue. Meanwhile production level has bottomed too. Announcement of new fiscal year budget is the only positive news for steel industry at the moment as it would increase demand if start implementing fast.
(Ex-rate; official: Rials 12,260/ 1USD , Market: Rials 17,000/ 1USD)
Iran Steel Service Center