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Iran Steel Market Trend in Week 36th , 2014

Billet

Billet price was downward during last week in Iran. Size 150 mm dropped by Rials150,000 / mt to Rials16.9 million / mt on truck in Anzali including 8% VAT and custom duty. Domestic billet size 120 mm also experienced the same decline in price to around Rials16.25 million / mt on truck including VAT but there was no interest in buying. Domestic production billet size 150 mm also priced at Rials16.5-16.7 million / mt including VAT, but no buyer in the market.

Import offers from CIS are USD520/mt cfr Northern Iranian ports but are not interesting for the buyers as fluctuations in ex-rate and some problems in transferring money would increase cost price for importers. Besides, domestic supply level is enough at the moment and there is no need to import. Actually, if import supply level stop completely for any reason, domestic mills can support market with higher production.

There are two reasons that importing billet has not stopped yet, including:

1- Import payment term which is 30% prepayment and the rest on shipment time. But for buying form domestic market, it should be paid 100% in cash and accepting possible risks about delay in delivery or quality of the cargo.

2- Price of imported billet at USD520/mt cfr Northern ports is yet profitable for traders, but buying from domestic market has no profit for them. Therefore, billet import level during current Iranian year ( 21 March-01 September) has been around 98.452 mt.

For increasing investment level In domestic billet production despite import market , we need changes in payment terms and purchasing procedures from mills or IME( Iran Mercantile Exchange). This needs changing policies at IME to avoid import parcels have a competitive strength.

 

Long products

Long products demand level is limited like previous weeks and some traders were trying to destock by offering cheaper than mills during last week in Iran. But demand level is scarce and there is no hope for improvement in near future.

Average price of debar declined by Rials 150,000/ mt to lower than Rials 18 million / mt ex-work including VAT. Some market participants expect around Rials 1 million / mt more decline in debar price before any improvement. Those who don’t accept this idea say that this amount of decrease in debar price need same declines in the raw materials such as scrap and DRI price which is not possible. If the situation continues, many small steel mills will be pushed to closures and this would affect billet producers too. When steel mills experience bankruptcy and closures, it would influence their bank loan payments too.

Esfahan Steel Co sold I-beam size 18 mm at Rials 16.41 million/ mt ex-works excluding 8% VAT at IME during last week. From beginning of current Iranian year ( 21 Mar-03 Sep)around 456,000 mt of debar and 430,000 mt of I-beam has been transacted at IME, which is equal to 178,000 mt per month and annual amount would be 2.3 million mt.

I-beam and merchant bars also experienced around 1 or 2 % declines in prices due to low demand level. Prices are at the bottom and downward trend in prices would not be significant.

 

Flat products

Price of HRC 2 mm thickness increase by Rials 600,000 / mt during last week in Iran to Rials 20.2 million / mt on truck in Anzali including 8% VAT and custom duty. The upward trend was due to higher ex-rate, problems in transferring money and delays in custom clearance for imported cargoes.  Market participants don’t expect any decrease in prices in near future.

Price of HRC 2.5-15 mm thickness dropped except for sizes 4 mm and 12 mm which are in supply shortage.   But lack of demand didn’t let their prices improve. If supply level of these sizes increase, prices will drop significantly.

HRP with thickness 15 mm or higher experienced apparent decline in demand, though prices dropped by Rials200,000/mt. Market players expect this downward trend continue in coming days.

CRC market was almost quiet at beginning of last week. Domestic leader mill Mobarakeh Steel Co is offering almost nothing in domestic market. Some participants think Mobarakeh Steel Co has reduced production level and some say it is exporting its production. This has led to significant decline in CRC supply level in domestic market. As ex-rate changed, prices increased by Rials100,000-200,000/mt by middle of the week, but just buyers which had immediate need accept these increases.

HDG market was in low supply for some sizes such as 0.40 mm, but higher import cargoes made market stable.

Ex-rate:   

In Exchange Room: Rials 26,616/USD       

In free market: Rials 31,780 /USD  

Iran Steel Service Center  

07 Sep 14   

Sep 14, 2014 08:06
Number of visit : 719

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