Billet
Billet size 150 mm was almost stable during last week in Iran. It was around USD605/mt on truck in Anzali including 6% VAT and custom duty for most of the week but also dropped by USD4/mt to USD601/mt by middle of the week. Main reason behind this stability is Christmas time in supplier countries and lack of supply in Anzali port.
Billet size 120 mm from domestic producers dropped by USD8/mt to USD565/mt ex-work including 6% VAT. Some market participants also offered at USD651/mt.
Main billet producer, Khouzestan Steel offered its billet at IME ( Iran Mercantile Exchange) at base price of USD581/mt without VAT and other costs after more than a month delay, which would be USD622/mt after 6% VAT and other costs. When imported billet is being transacted at lower than USD605/mt, expecting downward trend in Iran billet market would be logical as:
1- Importing billet from India or South Korea is easier and more affordable as prices are downward in these markets. Although it should be noted that profit margins has been limited currently.
2- As Scrap price in domestic market has dropped to lower than 404/mt ex-warehouse, domestic billet producers will have lower production costs.
3- Long products are in low demand in Iran and prices are downward, so expecting lower billet price is logical.
If we calculate production costs of billet based on using HBI, billet cost price won''t be higher than USD404/mt ex-work including 6% VAT. But for the producers which use scrap as the raw material for billet production, this cost price will be around USD484-525/mt ex-work including 6% VAT.
This calculations means that billet base price at IME should be around USD525/mt. If this corrections in domestic prices happen, billet import level will drop. For being competitive with domestic market, import price should drop around USD40/mt to USD470/mt cfr Iraian ports.
Long products
Long products market was downward during week 52nd in Iran. Just I-beam price improved a little but of course not for better demand.
Price of Debar with 8-32 mm diameter dropped by USD10/mt to USD686/mt ex-work in Ahwaz market.
Esfahan Steel sold around 6,600 tones of I-beam and debar at IME at USD648/mt ex-work excluding 6% VAT. As demand level is low and some prices are dropping by USD2-4/mt daily, market participants are pessimistic about future trend and expect debar price to drop to USD565/mt in coming two months till year end in Iran. This price has been experienced last time in first quarter of last Iranian year.
This negative forecast does not let traders take the risk to buy long products and prefer empty warehouses. This downward sentiment will influence all the production cycle including scrap, billet and HBI producers too. Besides, we are in last quarter of the year and steel mills are facing with shortage of liquidity. In this situation private sector steel mills have adapted themselves better than state mills as their low production capacity give them more strength for adapting with market changes. Big mills resist against declines in prices so feel more pressure from liquidity shortage.
It is clear that at the current situation investment in steel market is not something interesting. May be steel mills can increase selling orders by 2 - 3 months delays in payments, but it won’t help market sentiment and downward trend will continue.
Flat products
Price of hot rolled coil with 2 mm thickness increased by USD6/mt by end of last week to around USD749/mt on truck in Anzali including 6% VAT due to limited supply level from foreign sellers in Christmas time. Iranian importers will get shipping documents with delays because of Christmas Holidays and this has influenced prices. Around 40,000 tones of HRC has been imported to Iran during last Iranian month (22 Nov-21 Dec).
Other sizes of HRC up to 15 mm thickness had a stable week, as prices have reached the bottom and there is no possibility for seller to make a discount. Hot rolled plate from Oxin Steel Mill was stable in price due to limited supply level, but price of HRP from Kavian Steel is decreasing on daily basis. As Kavian Steel supply level is high it has gained import market and also Oxin Co market share.
CRC market experienced low supply level and stable prices. Demand level is scarce, though some sizes which are in heavy supply shortage had stable prices. Continuous quiet CRC market means there is something wrong in consuming sentions like construction market, home appliances and auto industry.
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(Ex-rate: In Exchange Room: Rials 24,771/USD)
Note: Prices have been converted from Rials to USD using exchange room rate as a base.
Iran Steel Service Center