Iran Steel market Trend in Week 26
Billet
During week 26, billet market fluctuated in Iran, also traders were avoiding from offering in the market as:
1-Due to LC opening problems, import level has dropped during last Iranian month ( 21 May-20 June) to 120,000 MT, so traders are worried about re-stoking. They prefer to decrease supply level.
2- Political sentiment in the market due to nuclear negotiations and sanctions
Price of billet size 150 mm fluctuated. For one week delivery it was Rials 12,100,000/mt and prompt delivery about Rials 12,450,000/mt on truck in Azali including 5% VAT. Domestic billet was around Rials11, 600, 000-12,100,000/mt ex-works for size 120 mm.
If sanctions do not affect production level of domestic billet, as debar demand is low and Ramadan coming, domestic mills can help steel industry regarding billet shortage. Market participants mostly expect billet price to increase.
Importers should follow a long procedure which takes at least 20 days to start applying for LC, including getting Iran Code, confirmation from Inspection Company and applying for import permit. After that LC opening regulations may change again and they have to start this process again. If this situation continues, it may hurt steel production more than ever.
Long products
Sections prices were upward due to:
1- Sanctions possible effect on production
2- Exchange rate volatility
3- Lower supply level
Many market participants believe that sanctions against Iran would make production level lower as raw materials supply level would face some problems and machinery and equipments of the mills are the other problem. If just a part damages in a production line, would make it stopped. Meanwhile ex-rate fluctuations has a direct effect on raw materials prices, consequently it would increase cost price.
Suppliers which are concerned about re-stocking are trying to hold their inventory level. Importing is very hard these days, so they have chosen IME, which has fix prices when retail market prices are surging upward. Government is facing a big challenge, if it let prices in IME rise, it would end to significant increases in the market, if it freeze prices, steel mills would hurt.
During first 3 months of current Iranian year, long products import level has dropped around 80% compared to same period last year to 67,792 mt. But in IME long products supply level during first quarter of current year was 1,146,000 mt compared to 1,016,500 means around 12 % improvement. It should be noted that some mills also have sales plans outside IME.
Late last week, ex-rate fluctuated harshly and made debar price higher than Rials 14,500,000/mt, if the situation continue, debar price would be more than Rials 15,000,000/mt.
Flat products
Limited supply level and currency fluctuations made flat products market upward. HRC market didn''t change significantly as domestic and import supply level is enough at the moment due to lower demand from infrastructure projects. HRC price should rise as debar and HRC price gap has become Rials2,000,000/mt in IME and Rials 3,000,000/mt in retail market which is not logical.
2 mm HRC was priced Rials 11,600,000/mt on Saturday, then declined by Rials 300,000/mt and rose again to Rials 11,700,000/mt on truck in Anzali including 5% VAT at the end of the week. Kavian and Oxin steel mills prices also rose by Rials 100-200,000/mt.
In HDG market, for some sizes suppliers didn''t announce price as were waiting for new CRC prices.CRC price increased around Rials200, 000/mt at the end of the week. It is like debar price or lower which is unusual as their production costs is totally different. Summer seasonal sadness and Ramadan coming won''t let CRC price change significantly, but if currency rate do not change.
(Ex-rate: Official: Rials 12,260/1 USD, Market: Rials 19,380 / 1 USD)
Iran Steel Service Center