Billet
Last week Iran billet market was quiet again. In the first 2 months of this Iranian year (21 March - 21 May 2010) around 670,000 tones of billet was imported to Iran but during last 3 weeks, it dropped sharply and reached 161,000 tones. Comparing with the same period of 2009, import volume has decreased around 60%. Although there are a lot of billet inventories at Iranian north ports.
Last week, billet was offered for $540/t at Iranian southern port including 3%VAT. Meanwhile foreign suppliers were ready to sell at $485/t cfr with LC from non-Iranian banks.
Long products market is so silent in Iran and this has lead to harsh drop of demand in billet market. Most of the consumers buy for their daily needs and they have decreased production rate more than 50%.
Billet market can not improve in short time, as long products market is going downward.
Long products
Last Sunday, Isfahan Steel mill offered rebar A3 grade for $630/t excluding 3% VAT and continued offering at the same price during the week. This pricing policy hit the market. Traders are worried about their rebar and IPE stocks which bought at higher prices so they rushed to sell. This has made price of other types of rebar especially Chinese one drop too.
On Tuesday, Chinese rebar was offered for $580/t including 3% VAT in Tehran Market for 2000MT/lot. As demand is decreasing and global prices are dropping too, many market participants believe that rebar price would drop to $560/t and IPE to $610/t excluding 3%VAT.
At the moment it’s possible to order billet at $490/t cfr Northern Iranian ports and rebar at $550/t cfr southern Iranian ports. Regarding custom duties, importing rebar is not cost effective for Iranian traders. For billet, its cost price after custom duty and 3% VAT would be $520/t. Adding freight rate and converting costs, finished rebar price would not be more than $630/t EXW. This is near to current average market price of $660/t including 3% VAT. But all these are theoretic calculations and in real market, falling billet price and more limited demand in long products market can lead to more stagnancy and lower prices.
This trend would continue until the end of July and maybe prices will reach last year’s low levels.
Flat products
Mobarake Steel has not offered in Tehran Mercantile Exchange since a month ago but the market is steel silent.
HRC 2 mm tick was offered for $540/t fot Iranian northern port at Caspian Sea including 3% VAT, but due to quiet pipe and profile market, HRC demand is so limited. HRC 2.5-12 mm tick was offered up to $630/t EXW, including 3% VAT in Isfahan but there is no demand and this price is similar to selling price of Mobarake Steel in Tehran Mercantile Exchange. HRC 12 -30 mm is being offered at $650/t in Tehran market but no buying interest.
CRC price dropped around $20/t last week but it has limited inventory. During last 3 weeks its import volume especially for sizes like 0.6, 0.9 and 2 mm decreased and supply is limited.
HDG price has dropped to $900/t including 3%VAT. As this material have high inventory, this trend will continue.
Import offer price of HRC 2 mm tick is $560/t and CIS origin CRC $645/t cfr Iranian northern port. HDG from China is offered at $850/t cfr Iranian southern ports but has no demand.
As many mills have stopped production and construction sector is silent, any improvement for flat products is impossible in Iran market till the end of Ramadan (end of August).
Iran Steel Service Center