Billet
Billet price was downward early last week due to the downturn in long
products market, but upward global prices and the subsequent rise in prices at
IME (Iran Mercantile Exchange) stopped further price declines. Some offers with
LC payment increased sales volume. Finally, it was down from USD 580/mt to USD 576/mt
ex-work including VAT.
Also last week,
according to Metal Bulletin, Iranian average export billet was up by USD 30/mt
to USD 590/mt FOB.
Long
Products
Weak demand reduced rebar price in the first two days of last week from USD
642/mt to USD 635/mt. With the announcement of higher billet price at IME and
global markets, part of the decrease was compensated and average price of rebar
finished the week at USD 636/mt.
I-beam price remained almost unchanged. Much of the price stability was due
to Esfahan Steel Co payment method of LC for sales at IME. I-beam finished the
week at average of USD 616/mt ex-work including VAT.
Flat
Products
Mobarakeh Steel co HRC 2 mm thickness was down by USD 8/mt to USD 868/mt by
last Wednesday. Higher supply level and weak demand, reduced HRC price.
Lack of demand made HRP market also downward as Oxin co HRP was down from
USD 1028/mt to USD 1022/mt and Kavian co product was down by USD 8/mt to USD 958/mt.
By end of the week higher global slab price, reduced negative sentiment of the
market.
In CRC market, also higher supply level and lack of demand made average
price down from USD 1138/mt to USD 1128/mt ex-work including VAT.
HDG price was almost stable during the week at USD 1163/mt due to power cut
at a mill, but as HRC price has decreased, HDG market may follow this trend in
near future too.
Weekly Analysis:
Last week, market
demand was weak. The most important reason was positive sentiment of the market
about Nuclear Talks and lower exchange rate after possible signing of the
agreement.
Regarding currency
rate, it was announced that desired rate of the government is not less than USD
1/ Rials 250,000. On the other hand, with the opening of Chinese market, global
prices began to rise. Along with these issues, the Ukraine crisis pushed up oil
prices. As a result, base price of billet at IME increased. Offering with LC
payment term allowed IME to see the highest volume of billet sales in the past
week. therefore, it signaled the market that rebar price will not decrease, and
for this reason, long products market improved encouragingly and hopefully by
mid-week. The sudden increase in the price of rebar at IME transferred demand
from IME to spot market, so that out of 219,000 tons of rebar offered at IME,
only 13,000 tons was ended in deals. Cheap purchased inventories with delayed
payment terms competed with IME offers. Therefore, stable rebar price, made
billet unchanged too.
For the coming
weeks, there are two key issues to keep in mind:
First, due to the
closure of bank credits, there is lack of liquidity in the market and
transactions are made with a payment of up to 10 days’ delay. As a result, re-rollers
are facing with liquidity problems, and this has caused rebar supply slow. In
the coming weeks we may see the same situation in billet market.
Second, upward trend
in global markets seem to continue for at least the next week or two.
The Ukraine crisis,
oil prices and Chinese demand reinforce this view. Gas and power cuts for some
mills also influence this condition. Now we are in the last week of the month
and have a mid-week Holiday, therefore, no serious change in market trends is
expected. Cheap inventories
stored in warehouses with a mid-week holiday will affect market trends.
In terms of price,
Mobarakeh Steel co and Oxin co flat products are not far from their floor level,
but demand is very weak too.
Experienced market
participants see next Iranian year (began at 21st, March) in a
different way with the existing budget, and even assuming a good end for Nuclear
Talks, in the shortest possible time, predict heavy inflation for next year.
This inflation would be due to higher costs from rising energy price and wages.
It should not be
forgotten that the sharp decline in banks’ lending rate has drastically reduced
production volume. Usually, recession in all parts of the world leads to lower
supply, Therefore, the argument of price jumps next year is not unreasonable in
view of higher prices and lower supply.
Therefore, the next two
weeks may see events that are far from expected.
CBI weekly average
ex-rate for Steel Products (SANA): Rials 245,337/ 1USD
14 Feb 2022
Iran Steel News
Bulletin
IFNAA.IR
IRSTEEL.COM