Billet
During week 38, billet market was downward in Iran. Size 150 mm was priced at Rials 16,500,000/mt on truck in Anzali including 5% VAT, compared to Rials16, 850,000/mt at the beginning of the week.
There are 2 main reasons behind this decline;
1- Lower Exchange rate
2- Downward prices in sections market and scarce market activity
Though, buyers prefer to hold wait and see policy. Besides, more pressure from liquidity shortage, made transactions levels so limited. Anyway, domestic producer, Khouzastan Steel sold 16,000 mt of its billet at IME at Rials15,126,000/mt, which would cost Rials15,900,000/mt including VAT for buyers. Now market participants are confident that bottom price of long products is Rials18,000,000/mt ex-work including 5% VAT.
During last Iranian month ( 22 Aug-21 Sep) around 101,780 ton of billet was sold at IME compared to 268,410 ton a month ago. Besides, around 205,397 ton of billet has been imported during last Iranian month compared to 365,946 ton a month ago. Therefore, about 307,177ton of billet has been supplied from domestic and import market during last month which shows around 51% drops from previous month that is 327,179 ton decline. It should be noted that production of small domestic mills which are offered in retail market not at IME has not been included in this calculations.
Long products
Long products market experienced one of its most depressed weeks, due to;
1- Significant declines in ex-rate and different news regarding its future trend
2- Strong drop in demand level
3- More supply level in the market from last purchased stocks
Prices were downward. Some long products had profit margin of around Rials100,000/mt. By Wednesday, downward trend was stopped.
During last three months of summer in Iran, debar supply level at IME was respectively 113,000 mt, 92,000 mt and 69,000 mt. For debar and I-beam the downward trend was more as it dropped from 442,000 mt to 126,000 mt and then 97,000 mt during last month.
Therefore a downward trend in prices is not unusual, but as billet price was not decreasing very strictly, so more drops in sections market is not expected. With resistance of mills for lower prices, coming weeks will see a more balanced market. Some traders have stopped selling and are waiting for a clearer trend and improvements.
Flat products
HRC 2 mm thickness saw some rises during last week but was back to Rials17, 300,000/mt at the end of the week. It was priced up to Rials17,600,000 /mt on truck in Anzali including 5% VAT, but as transactions levels were limited, market resisted against the increase. For HRC 2.5-15 mm thickness, from Mobarake Steel mill, prices were up by Rials100,000/mt during the week but come back to last levels again. But products of Oxin and Kavian Steel mills experienced Rials10,000/mt drop in prices, as 2 suppliers offered at prices lower than retail market level. Demand level was scarce too.
In CRC market, sadness was reported. Prices dropped by Rials 300,000/mt as demand level is limited. During last month, CRC price was upward, which is not acceptable for consumer industries, so market activity is low. Last month around 11,000 mt of CRC has been imported to Iran but domestic producer supply level was more than 111,000 mt which was not seen during 6 month ago.
HDG market fluctuated with ex-rate fluctuations, but market became quiet by middle of the week, some traders stopped offering, and the others continue dealing, so market trend and prices was not stable.
Ex-rate increase has not let flat products prices drop or supply level increase and current prices are not affordable for customers. It seems that flat products market need about 2 month for becoming balanced, unless another factor besides supply and demand level, affect these products market.
Ex-rate: Official: Rials 12,260/ USD, Market: Rials 24,469/ USD
Iran Steel Service Center