Billet
Billet size 150 mm was almost stable around Rials17 million / mt on truck in Anzali including 8% VAT during last week in Iran. Billet size 125 mm in import market was also unchanged at Rials16.9-16.95 million/ mt on tuck in Anzali including 8% VAT.
Despite new regulation that importing billet is not allowed anymore with exchange room currency allocation, its market sentiment has not changed and demand level or price is unmoved.
With new regulation, cost price of importing billet at USD520/mt cfr northern Iranian ports would be at least Rials18.25 million/ mt on truck in Anzali including 8% VAT ( with free market rate around Rials32,000/1USD). But at the moment stocks available at the ports are from last purchases with exchange room allocated currency and more purchased cargoes would come to Iran in coming 2 months. These cargoes cost price is around Rials 16.5 million/ mt.
At the moment ex-rate fluctuations is not affecting available cargoes in the market like before. There are 2 reasons behind this change in market trend:
1- Low billet demand due to lack of interest in long products
2- Cheap domestic billet size 150 mm available at base price of Rials 15.5 million/ mt at IME ( which is Rials 16.75 / mt including 8% VAT). Domestic billet size 125 mm is also offered at Rials 16.25-16.4 million/ mt including 8% VAT.
As demand level is limited, domestic billet is also not much interesting for buyers. This lack of demand led to around Rials500,000-700,000 / mt decline in scrap price in Iran. If market sentiment does not change, scrap price may drop more. But it should be noted that in coming month scrap collection will decrease due to seasonal factors.
Long products
Debar price declined around Rials 200,000/mt during last week in Iran. Lower price didn’t help demand improvement. Some market participants are pessimistic about market trend and expect debar price go back to last year level (base price of Rials17 million/mt). Subsidies reforms has increased cost price by 7-12% but this pessimistic idea believe base price of billet will drop by Rials1 million /mt. If so, debar price will be back to last year’s level. Lack of demand is the main reason behind this negative idea.
Debar price reaching near last year prices is not unlikely, but won’t reach that level surely. At the moment long products producers in Iran can be divided in two groups:
1- First group are big mills which are mostly state owned, so price fluctuation is not serious for them. Their main priority is sales level. They resist against any decline in prices and have government supports.
2- Second group are small mills with high costs due to low production level. These mills have reduced production during current months to the lowest.
If this condition stays in the market, their production would be stopped. Though, billet demand will decline and its price will reduce. But If average price of debar reach Rials17.5 million, billet production will also decline.
After 2008 world financial crisis, same situation was seen in steel markets. Steel prices were downward and became stable by middle of 2009 but when many high cost small mills were closed with higher unemployment rate.
Flat products
Hot rolled coil 2 mm thickness was almost stable during last week in Iran. It was offered at Rials 20.2-20.3 million/mt on truck in Anzali including 8% VAT and Rials 19.9-19.95 million/mt at Imam Khomeini Port. There was a rumor about Chinese origin cargoes on the way to Iran which will decline prices when arrive.
CIS origin HRC 2 mm is USD570/mt cfr Northern ports, Chinese origin is USD560/mt and Korean one USD600/mt cfr Southern Ports. HRC price is downward globally specially in China, which will affect offer prices to Iran. Market participants expect Chinese HRC price decline by up to USD20/mt in coming weeks.
HRC thickness 2.5-6 mm was almost stable despite low supply level due to lack of demand. Imported HRP, 6-15 mm thickness was offered during last week in Iran. Domestic producers’ offers will increase too, so prices will be affected in coming weeks. Price of HRP with thickness more than 20 mm, dropped by Rials100,000/mt with market quiet sentiment.
In CRC market import offers increased but high ex-rate at exchange room didn’t let prices decline significantly. Domestic CRC is not available for some sizes, but prices didn’t change.
In HDG market prices improved by Rials100,000/mt due to higher ex-rate but demand is still scarce.
Ex-rate:
In Exchange Room: Rials 26,632/USD
In free market: Rials 31,900 /USD
Iran Steel Service Center