Billet
Average billet price
on Saturday last week was USD 390 /mt , which reached USD 404/mt ex-work
including VAT till Wednesday. Reasons behind this upward trend were DRI supply
limitation and higher ex-rate.
Given the current
situation and if ex-rate declines, lower billet price in the coming days would
be likely, especially as rainfall in the southern parts of the country where
most DRI producers are located has made transportation difficult, but the
extent of the possible decline in prices cannot be severe to reach price level
of previous weeks. This is because billet base price at IME has improved.
The latest statistics
show that production capacity of billet will reach 39 million tons by the end
of current Iranian year, with a capacity of 46 million tons of DRI and 93 million
tons of pellet be needed for producing this amount of billet. While DRI
production capacity will reach 36 million tonnes and pellets to 53 million
tonnes by the end of the year, there will be at least shortage of 10 million
tonnes of DRI and 40 million tonnes of pellets by the end of this year. These
gaps will be deepened next year as the production capacity of billet will reach
43.6 million tonnes. For this volume of billet production, 52 million tonnes of
DRI should be produced, while the installed capacity will be 37.2 million
tonnes.
so there are two ways
in front of the authorities:
1- The first solution
is to import scrap, which increases the finished cost of steel products, though
this corresponds to the smelting sector and is not related to the installed DRI
capacity and the DRI production sector will have problem of pellet shortage.
2-The second option is
to import iron ore that requires infrastructures while the price of imported
iron ore is far from domestic iron ore. In the most optimistic case, the price
of imported iron ore is close to USD 93/mt, which is equivalent to today's
pellet price.
Apart from all this,
if all capacities are met with a miracle, the production of 40 million tonnes
of billet should end in production and export of steel products. Which by
itself is another challenge for Iran steel Industry.
Next year will be a
challenge in two areas: the first is the supply of raw materials for steel production
and the second is the sale of the finished products in a market which lacks
buyers.
Long
Products
The average price of
the rebar was USD 425/mt on last Saturday, but reached USD 442/mt on Wednesday.
On the one hand, the rise in the price of rebar was due to rising price of billet,
higher currency rate and transportation difficulties for some mills. Market
sentiment changed since Thursday and it seems that the prices are going to go
down in the coming days.
Supply trend of
I-beam size 14 by Esfahan Steel co was not clear last week, so the average
price of sizes 16 and 18, which was USD 512/mt on Saturday, reached USD 504/mt
by the end of the week, partly due to the drop in prices for size 16. Size 18
was also in a downward trend but market closure on Monday and political
uncertainties on Tuesday, influenced market sentiment.
On Friday, the US
imposed new sanctions on many Iranian steel mills, which may symbolically be a
show, but market insiders believe it won’t affect our steel export market
seriously.
Flat
Products
The price of two mm thickness HRC on last Saturday was USD 565/mt
ex-work Esfahan and USD 543 /mt ex-work Ahwaz. But due to the uptrend of the
exchange rate, HRC price in Esfahan rose to USD 610/mt on Wednesday and to USD 589/mt in Ahwaz, while
prices at IME remained unchanged.
HRC thickness 3 to 15 mm averaged USD 623/mt on Saturday, reaching USD
653 /mt by Wednesday.
Oxin co HRP 10 to 35 mm thickness were offered on Saturday at USD 637/mt,
but changed by Wednesday to USD 662/mt.
CRC was priced USD 812/mt on Saturday and
by the end of the week was up to USD 841/mt. This trend was also seen in HDG
market which was priced at USD 780/mt on Saturday but reached USD 808/mt
ex-work including VAT on Wednesday last week. What has been noticeable over the
past week is that the average HDG price was lower than CRC price on Wednesday,
due to the increase in the price of CRC by Mobarkeh Steel co and its limited
supply level. But HDG available in Tehran market is mostly produced from HRC
and matches its base price with HRC.
CBI
weekly average ex-rate for Steel Products (SANA): Rials 117.957 / 1USD
13 Jan
2020
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Iran
Steel News Bulletin
www.Ifnaa.ir
www.irsteel.com