Billet
During first half of last week, billet price surged upward despite expectations, due to new policies for importing and ambiguities regarding exchange market. Its price increased from Rials13,850,000/mt to Rials 14,550,000/mt on truck in Anzali including 5% VAT. By middle of the week market became slower and billet price around Rials 14,300,000-14,400,000/mt.
There are 2 views regarding billet market future trend;
1- The first view says that billet price won''t rise any more as domestic supply level will increase and is around Rials2,000/mt cheaper than imported billet. Global billet price is lower than USD600/mt cfr Southern Iranian ports, if be imported by open market ex-rate, finished price for imported billet would be Rials13,500,000/mt on truck in Anzali including 5%VAT. Besides sections prices has peaked and more increases is unlikely.
2-Second viewpoint believes that Billet market has potential to rise to Rials16,000,000/mt including VAT. The logic behind this view is that based on latest news, official ex-rate will increase to at least Rials 15,000/USD in the near future, so imported billet parcels may arrive traders warehouses by this ex-rate not the current rate of Rials12,260/USD. Besides after scrap price rise and billet demand increase, domestic producer will rise billet price too as it has increased from Rials9,000,000/mt to Rials12,450,000/mt till now in IME.
Also it should be noted that at the moment global billet price is lower than USD600/mt cfr Middle East ports due to seasonal factors. Usually by end of August, when summer holidays and Ramadan come to an end, prices will rise, so Iran billet market should expect higher prices in coming months.
Long products
During last week long products market was affected by changes and ambiguities regarding exchange rate and its application policy for importing. Isfahan Steel sold rebar at Rials13,711,000/mt in IME. Its finished price after VAT and other costs would be more than Rials14,420,000/mt. So prices started rising in retail market between Rials100,000 -400,000/mt. Finally long products market was quiet and stable by middle of the week. Some products prices dropped and the others were stable. By Wednesday domestic mills started rising prices again. Some deals for 1,000 mt of debar were finished at Rials 16,000,000/mt or higher, which shows market resistance against declines in prices.
During last week ex-rate was up to more than Rials20,000/ USD, besides ambiguities regarding opening LC rose and investors had no way unless paying attention to domestic supply which is limited too.
During last Iranian month (21June-21 July) billet import level was tripled to 314,000 mt, but low inventory levels of section producers and ex-rate fluctuation lead to limited supply level.
Flat products
Price of HRC 2 mm thickness increased around Rials 700,000/mt during last week to Rials14,700,000/mt on truck in Anzali including 5% VAT. For thickness 15 mm or higher prices were upward too, it has increased around Rials100,000-400,000/mt during last 2 weeks.
During week 31, Mobarake Steel mill sold different kinds of HRC at average price of Rials 9,700,000/mt in IME with transaction levels totally around 127,000mt with next month delivery. Generally any significant price change is not expected in flat products market.
CRC price was upward due to lower import level and ambiguities in exchange market. HDG market was in the same situation. Import level is dropping and CRC market is in shortage too.
At the moment Iran steel market is facing some imbalances. For instance, imported billet price is around Rials14,300,000/mt in Anzali, but domestic I-beam has the same price in Isfahan!! It is around 6months that market is facing such a matter. Generally I-beam is being produced by iron ore, but there are mills that use billet for producing I-beam, so what would happen to them?? Debar is around Rials17,000,000/mt, CRC around Rials16,000,000/mt and HRC is Rials12,000,000/mt. Iran Mercantile Exchange has made such a situation in Iran. Slab price of Mobarake Steel is around Rials 8,900,000/mt but bloom from Khouzestan steel around Rials12,500,000/mt. 40% gap in their prices is unusual.
(Ex-rate: Official: Rials 12,260/1 USD, Market: Rials 19,759/ 1 USD)
Iran Steel Service Center