Billet
On Sunday last week, average price of billet sizes 125 and
150 mm was USD 327/mt, which reached USD 322 /mt ex-work including 9% VAT by
Wednesday. In some places, it was heard below USD 317/mt. There were several
reasons for the decline in billet price:
1- Government authorities are trying to control billet price
at IME ( Iran Mercantile Exchange) and doesn’t let its base price drop to lower
than USD 291/mt ex-work excluding VAT. But lower prices have made production
lower and after market activities improve, prices may become upward.
2- The second factor in lowering the price of billet is lower
export volume and export prices. Iranian billet export price FOB Iranian ports
has dropped from USD 390/mt to USD340/mt, which means a decrease of about 14%.
More importantly, the volume of exports has dropped sharply and has practically
stopped. If global billet demand does not improve over the next month, the
existing billet inventories will flow into the domestic market, which will
intensify sales competition.
3- Lower long products export level due to the closure of
borders has reduced demand for billet in domestic market. Until there is no change
in the export level of long products, there will be competition in the billet
market which will lower prices.
Long Products
Average price of rebar on Saturday last week was
USD 399/mt ex-work including 9% VAT, which was reduced to
USD 378/mt ex-work including 9% VAT by Wednesday. Most
market participants expect this trend to continue for the following reasons:
1- Controlling billet price at IME, at base
price of around USD 291/mt, which means maximum price of rebar in the market
would be USD 356/mt including VAT. Therefore, downward trend of rebar is
expected to continue in retail market.
2- Reduction of export due to closure of destination
markets, so sales competition will continue until export markets be open.
3. Liquidity shortage of rebar producers
especially those active in export market before which have not been able to
return the currency due to closure of foreign markets, is another factor
leading to competition.
4. Anti-inflationary market expectations; Iran
steel market has not become officially active yet, but most market insiders are
looking to avoid buying because they expect prices to fall. Withdrawal of
demand and preference for keeping liquidity will lead to lower prices.
Average price of I-beam sizes 14 to 18 in
Isfahan on Saturday was USD 447/mt, which dropped to USD 421/mt by last Wednesday.
The most important factor in lowering the price of I- beam, apart from the
issue of exports and factors mentioned above, is stricter anti-inflationary
expectations of the market.
Flat Products
HRC 2 mm thickness was USD 566/mt ex-work Isfahan including VAT by
last Saturday, which was heard up to USD 472/mt by Wednesday. Price of thickness
of 3 to 15 mm declined from USD 670/mt to USD 552/mt. The last price of HRC
class B sold at IME by last Iranian year was USD 378/mt, while this year it has
dropped to USD 338/mt excluding VAT. Oxin Co HRP thickness 10 to 40 mm was
priced at USD 690/mt on Saturday, but dropped to USD 648/mt by end of the week,
while lower offers were also heard in retail market. Reasons behind lower flat
products were also discussed in billet and long products sections, but one
point about flat products should be added which is lower global slab price. Last
year, Mobarakeh Steel co exported a large volume of its slab, but this year,
due to the closure of foreign markets, slab demand is still declining.
Price of CRC thickness 0.50 to 2.5 mm declined during last week in
Iran domestic market from USD 878/mt to USD 829/mt. There is a wide gap between
CRC price of last year at IME with delivery of next month at USD 546/mt and
current market price, therefore, due to lack of demand and especial situation
of consumer markets due to coronavirus spread, downward trend of prices should
continue.
HDG was priced at USD 858/mt on last Saturday, but dropped to USD 819/mt
by end of the week. Lower HRC price was the main reason for this decline in HDG
price, which is expected to continue.
CBI weekly average ex-rate for Steel Products
(SANA): Rials 154.497 / 1USD
20 Apr 2020