Billet
During last week price of billet size 150 mm dropped by Rials 700,000/mt to Rials15,400,000/mt on truck in Anzali including 5% VAT. Sale price of domestic producer Khouzestan Steel didn''t change at Rials 13,460,000/mt at IME. Negative sentiment made buyers more cautious, so transactions levels dropped.
Billet price is downward due to following reasons:
1- Higher supply level: During last Iranian month about 171,000 mt of billet has been transacted at IME, but during first 25 days of current month it was more than 268,000 mt. This means around 60% rises in domestic supply level.
Besides, billet import level has increased to around 314000 mt during last month and is expected to increase more.
It has been heard that 5 CIS producers have sold 290,000 mt of August production, September shipment to Iranian buyers. So with debar price declining, and billet supply level increasing, downward trend is not avoidable.
2- Downward debar price: As debar demand level is dropping, domestic mills are less interested in buying billet, so they prefer wait and see policy. This has made billet market more depressed.
Long products
During last week Iran long products market was full of tensions. Rumors about availability of 200,000 debar in Tehran warehouses made prices dropping, as traders concerning about drops after higher supply level, tried to sell their available material at any price. At the end of the week market trend was stable but with around Rials 1,000,000/mt decline in base price which became Rials18,000,000/mt or lower. I-beam average price was lower than Rials 14,000,000/mt.
The only reason for this kind of fluctuations was a quiet market without any activity.
Other long products had the same trend and market participants believe prices would stay at this current level during coming Iranian month (22 Aug onward) . Debar average sale price at IME was Rials 17,000,000/mt . After including 5% VAT, debar price in retail market shouldn''t be lower than Rials 18,000,000/mt
Some market participants by paying attention to Isfahan Steel mill last debar sales at cheap prices, expect some declines in coming weeks, but it won''t take too long and debar base price may be Rials 17,500,000/mt for a while.
Debar import level has decreased and domestic producers are trying to control market, so prices may stabilize. All these predictions are based on a fixed ex-rate, as if it fluctuates again, market trend would be highly affected.
Flat products
HRC 2 m thickness started week 33 downward, after Rials 900,000/t decline, it reached Rials15,000,000/mt on truck in Anzali including 5% VAT. Prices of other sizes of HRC were decreasing too. At IME HRC price increased by Rials500,000/mt but by middle of the week started declining.
In HDG market prices started the week rising but market negative sentiment made it downward after 3 weeks of stability. CRC market experienced the same trend as other flat products.
There are 2 reasons behind expectation of downward trend in flat products market:
First one is that summer holidays of many steel mills is being started and Eid Fetr holiday will decrease demand level strictly. The second one is that a significant part of flat products have been bought with floating ex-rate, so prices are not rising. The best prediction would be stable prices, with possible potential for Rials500,000/mt declines.
(Ex-rate: Official: Rials 12,260/ USD, Market: Rials 21,244/ USD)
Iran steel Service Center