Billet
Billet market was upward during last week in Iran. Imported billet size 150 mm was up by USD16 /mt to USD617 /mt on truck in Anzali including 6% VAT and custom duties. In domestic market Khouzestan Steel Complex sold 95,000 tons of its billets at base price of USD 554 /mt on Monday at IME. The mill sold 85,000 tones cargo at base price of USD573 /mt a day later. This transaction made market situation different and prices started rising. Price of size 120 mm from domestic mills changed from USD 566-570 /mt ex-work including VAT to USD 583/mt by end of the week.
The reason behind upward trend in billet market was announcements about ending energy subsidies by New Iranian Year (from 21 March). Many steel mills looking for cheaper material went to IME for purchasing billet. It should be noted that they also increased their long products prices which made market stronger.
At the moment minimum finished price of imported billet is USD595/mt after custom duty and VAT which is not affordable for importers due to long investment period. Billet import level is declining monthly. It has dropped from 64,000 tones 3 months ago to 11, 000 tones during last Iranian Month (finished at 19 Feb). Besides, domestic producers have increased their production level.
Long products
Long products market was ambiguous by beginning of last week but finished it surprised. USD18 /mt increase in billet price at IME made debar price improve from USD 647-651/mt to USD683 /mt ex-work including 6% VAT . But new purchases mostly went to ware houses as there was no real demand in the market. Sudden surge in prices and putting purchase cargoes in warehouses made upward trend stopped. By end of the week cheap purchased materials come to market and made prices down. Market participant expect long products prices decline in coming days and finally stabilize.
Actually higher long products prices are just due to higher cost producers are paying for billet and there is no profit for them. They will try to increase their sale level in coming 10 days as market activity will stop till New Year. They should solve their liquidity shortage problem, which will influence market trend in New Year too. Esfahan Steel Co sold 80,000 tones of its I-beam and 66,000 tones debar during last week and got around USD94 million to support a small part of its liquidity needs in year end, actually it is not a big money for a producer like Esfahan Steel.
Flat products
Price of hot rolled coil 2 mm thickness increased by USD12 /mt to USD755 /mt on truck in Anzali including 6% VAT and custom duty. Other sizes were also upward during last week. Some sizes are facing supply shortage especially for Mobarakeh Steel Complex products. As the mill supply to end users and demand level of end users has dropped significantly, so limited supply will continue. Production level of Mobarakeh Steel has been mostly higher than 500,0000 tones during last 11 months, but demand level has been downward from 5 months ago. Though it is obvious that increase in prices is due to supply level and policy of the mill not production level.
Price of HRP from Kavian and Oxin mills also increased regarding supply shortage. If HRP price increase from USD687 /mt to USD703 /mt, import parcels will come to market and upward trend will stop.
CRC price increased during last week just due to low supply level. Low profitability of the market during current months made investors going away from CRC market. Market participants do not expect any change in the market as we are in last month of the year in Iran.
HDG price increased by USD12 /mt during last week due to limited supply level. As demand level is also low , HDG market won’t experience significant changes in near future.
(Ex-rate: In Exchange Room: Rials 24,891/USD)
Note: Prices have been converted from Rials to USD using exchange room rate as a base
Iran Steel Service Center