Iran Steel Market Trend in Week 23

Iran Steel Market Trend in Week 23

Billet

Steel market was not active during first half of last week due to holidays. Producers benefit from holiday times as they do no not profit from making debar from billet. By Tuesday after market opened, lower supply of debar and its higher price affect billet market and price of billet size 150 mm increased to Rials 11,000,000/mt on truck in Anzali including 5% VAT and finished the week at Rials11,500,000/mt. But sellers prevented from offering.  

Main reason for the cautious policy of sellers is that they are concerned about their inventory level after selling. Problem of opening LC has not improved yet. Billet price is USD640/mt  cfr Northern ports with cash payment. Limited sellers are ready to deal by LC payment and their sale price is more than USD680/mt. So billet importer should buy at UAD640/mt and the final price after custom duty would be at least Rials12, 500,000/mt , so they would lost Rials1,000,000/mt. Or after importing with official price exchange rate, final price would be Rials 9,350,000/mt, it means Rials 2,150,000 profit for every tone.

But buying with official ex-rate and opening LC face with two problems. First of all the importer should find a seller ready to deal with Iranian buyers with LC payment, second problem is LC opener bank in Iran, which wants 100% prepayment.

As scrap price in global markets have dropped to under USD400/mt cfr Turkey, any improvement in billet market is unexpected. Summer holidays and Holy Ramadan is coming too. Billet price would drop more and everybody in all markets around the world is waiting, so import level will drop more.

This situation is a chance for domestic billet producers, if this trend continues for another year, Iran steel market would be self-sufficient in importing billet. To increase production level, producers will need scrap, though investments in scrap market will improve. At the moment Iran steel market is facing big challenges regarding supplying scrap.

Long products

By Tuesday when market was open after a long weekend, log products prices started rising and debars was up by Rials300,000/mt and I-beam by Rials200,000/mt. As inventory levels are low, supply and demand level is balanced. Mills are faced with higher raw materials prices and production costs, besides demand level is low so they should curb production level. Market has become so fragile and any economic or politic news affects demand and prices.  

Producers are against any decrease in prices as market trend is not the only factor influencing transactions.  Generally market participants believe that import level will drop, so many traders are buying at IME. Besides producers should obey state price policies for controlling inflation. But their production costs are rising, therefore supply level at IME is decreasing. Traders believe that they won't lose anything if buy more.

Flat products

Price of HRC 2 mm thickness increased by Rials 200,000/mt during last week to Rials 10,500,000/mt , mainly due to absence of leader sellers in the market. Beside limited supply due to import problems, demand level has dropped too. Pipe and profile producers are facing liquidity shortage.

Price of Mobarake Steel HRC up to 15 mm thickness, increased by Rials 50,000/mt, due to lower offers from big traders. Though demand level has not changed. Mobarake Steel continued offering and didn't let prices change. For HRC thickness higher than 15 mm, problems for import market still continue. But demand level is low, so market participants do not expect any significant change in market trend in near future.

CRC market was silent without any change. Import level has dropped but higher supply level from domestic supplier Mobarake Steel beside lower demand has made market unchanged. CRC demand level is dropping in consumer sections such as white goods and pipe and profile market. Any improvement in demand level is unlikely till next 2 months. Global prices are downward too, so traders are very cautious in importing. If the current trend continues, market would face shortage in second half of the year.

HDG market was stable too, for some sizes prices dropped a little. For some other sizes, domestic supply level is limited but low demand and Chinese and Indian cargoes in the market do not let prices change.

Iran Steel Service Center