Billet
Billet price fell during last week in Iran
domestic market due to lower ex-rate, lower inflationary expectations and, most
importantly, the midweek Holiday. It was down from USD 617/mt to USD 594/mt
ex-work including 9% VAT.
Long
Products
Rebar price declined from USD 669 /mt to USD 663/mt ex-work including
VAT by end of the week. Main reasons were lower ex-rate and midweek Holiday.
I-beam price was also downward from USD 662/mt to USD 657/mt ex-work including 9% VAT.
Flat
Products
Price of 2 mm HRC of Mobarakeh Steel co was USD 1098 /mt on last Saturday,
which did not change until the weekend. Price of other HRC items of the mill was
downward. The main reason was Lower ex-rate and waiting policy of market
participants.
Despite lower currency rate, Oxin co HRP price was rising from USD 1271 /mt
to USD 1279 /mt due to limited supply level, and this trend seems to continue.
The main reason for this trend was sharp upward trend in global slab price.
Due to limited supply of slab and the increase in its price, Kavian co HRP
price was also upward from USD 1097 /mt to USD 1105/mt.
Supply constraints, made CRC price upward. As global prices have jumped
recently this upward trend is expected to continue for a while in Iran. HDG
price dropped from USD 1363/mt to USD 1339 /mt due to lower HRC price and downward
ex-rate, which affected Zinc price.
Weekly Analysis:
Cost
of any good is based on its components such as raw materials, wages,
depreciation and energy costs. But final price of a product is the result of
its supply and demand level. A special
painting may cost USD 100 to produce, but its price would reach millions of
Dollars at an auction. Rebar costs, according
to billet price and other factors at least around USD 597/mt. But its price
fluctuates depending on demand level. There are factors besides component
elements of cost price of a good that affect its final price, such as inflation
or market closures.
Over
the past year, all countries around the world have been faced with a sharp
decline in demand due to Covid-19
pandemic. This has reduced global consumption level, but on the other hand,
governments have started printing money to cover their expenditures. It is not
clear exactly how much, but it is said to be more than $ 15 trillion. When the
volume of money increases globally, dollar rate falls. The fall of dollar means
rise in the price of oil, steel, cement and other commodities.
In
recent months, we have seen price of these goods have been rising, because
volume of printed money is very high and delayed demand of a year ago is showing
itself. Iron ore price increase to a record high above $ 200 indicates that
steel prices simply do not go back to six months ago. It should not be
forgotten that Australia’s rainy season is also coming.
Some market insiders believe that signing of The Joint Comprehensive Plan of Action (JCPOA) means a drop in ex-rate and the start of oil
export will end in stability of ex-rate at around of USD 1 = IRR 200000 or
lower. Others reject this theory because they believe that with the
implementation of JCPOA,
repressed demand of Iran and its thirsty market will wake up and swallow all the
dollars received. Coming months would be historic time for Iran economy.
CBI
weekly average ex-rate for Steel Products (SANA): Rials 209, 441 USD
10 May
2021