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Iran steel market Trend in Week 35th, 2017

Billet

The price of billet was a catastrophic collapse, as expected by everyone during the previous week, at the first week the average price of 150mm was USD553/MTNS and the size of 125mm was USD545/MTNS, but no buyer. From Sunday prices started to decline up to 25USD/MTNS while buyers retreated from the market, the downtrend continued until the weekend, the size of 150mm reached USD489/MTNS and 125mm to USD476/MTNS. Some factories traded a limited stock at a price of USD471/MTNS for a size of 125mm. But since Wednesday, the fall in prices has stopped, inventories of factories have fallen to their lowest, while production had stopped. Most insiders believe that there will be no further price reductions and billet prices will face a limited increase next week to reach its balanced price.

The process by which the billet has gone through the last 6 months was wonderful. The minimum price of billet has been recorded on April 17, was USD342/MTNS for size 150mm. Since June, the increasing trend has begun and on Aug 23, it reached to its peak at the rate of USD579/MTNS for the same size. During this period, another thing happened. Divided market happened after chaos in prices, this trend led the private sector to take more market share. On the other hand, the shortage of raw materials identified the weaknesses of small factories, in particular, rerollers. They were looking for material while raw materials were used on the export route, the local market was in the severe need, but there was no consumer demand on the market, and products were dampened in warehouses. This would push pressure on producers, especially rerollers to seek maximum use in the shortest time, because there was risk of flooding cheap stock in the market. Today this risk is happened, the market is calm and not tense. Now, it's the best time to see the performance of each unit.

This condition of non-sales and stagnation is not sustainable, due to the fact that firstly, billet exporting companies have not yet delivered the previous orders sold at a price below USD500 per tonne FOB and need sponge iron, sponge iron also is in the shortage of supply. The scrap is also in the same condition, so the billet problem will continue, the declining trend for billet price is virtually halted, and next week we will see a limited price increase, while the long products market face horror. Billet price stability will help long products market and will balance it.

 

Long Products

From a week ago, everyone was expecting fall in prices, it happened from Saturday. The average price of 14 to 25mm bars in Isfahan was USD637/MT on Saturday and USD627/MT in Dezful. On Wednesday, the average price in Isfahan was USD597/MT and for Dezful USD607/MT. The average price for I-beam size 140 up to 180mm on Tuesday in Isfahan was USD724/MT, which fell to USD700/MT by the weekend. The discount race started from Sunday and peaked until Tuesday. All buyers retreated on this day, while sellers were looking for sales. market was silent on Wednesday afternoon.

The ingots were discharged from the factory, the sponge iron was stable and its supply was strictly limited, while scrap was in short supply. During the three business days, the price bubble for long products burst. Isfahan Steel products faced near USD5/MT price rises from Thursday, and other factories looked at positive perceptions to the coming week. So, they all hoped that the next week's price downturn will stop and the market will improve while cheap stocks are still in the market, but these inventories can no longer play a role. Selling these commodities at a price below the current prices would mean a loss for the traders, because the return of the price to three months ago is impossible. So the replacement of the goods will be with loss.

 

Flat Products

HRC 2mm thickness was traded at USD726/MT in Anzali on Saturday, but by the weekend it reached to USD695/MT. Some offers were heard at the price of USD690/MT in the market. The reason for the price decrease was on one hand, the Gilan products increased in the market to the extent that all of these products was not sold The second reason was the very limited market demand, while Mubarak was absent and there was no stock exchange listing on the stock exchange. The 2.5 to 15mm thickness plates of Mobarakeh's product rose on Saturday, this trend continued low on Monday. The average price of 2.5 to 15mm on Saturday was USD668/MT, but by Thursday it fell USD667/MT due to market weakness and lack of demand. Auxin and Kavian sheets were in a downtrend. The main reason for falling prices was lack of demand. The average price of Saturday for thicknesses 12 up to 30mm was USD643/MT and on Wednesday USD628/MT. The cause of auxin fall beyond demand weakness was for high inventories, while auxin is settling its last year debts with creditors. These goods were traded at less than USD515/MT, regardless of how long the owner's money has been on auxin hand, it is still far away from the market price. A buyer who is tired of this delay is willing to sell his stock after receiving it. This does not allow the real price to appear.

The cold sheet was in a downward trend despite the bullish price hike of dollar over the past week, but there is a huge lack of demand for CRS, as consumer factories are on holiday and this trend will continue until the end of September. Average cold rolled sheet price on Saturday for thickness of 0.40-1.5 mm for Mobarake and CIS products was USD826/MT, which reached to USD813/MT by the end of the week. In August, Mobarakeh traded 79.742 tons of cold sheets in the exchange market, while in July 89.810 tons, in June 89.924 and in May, 96.107 tons, actually the Mobarake’s offer curve in exchange market has been on the downside trend. But the Mobareke imports was 37.837MT on May, 28.530MT on June, 39.548MT on July and 48.422MT on August, while most insiders expect the September import to be less than 30.000 tons, since orders were recorded in August was much less than July.
HDG passed a calm week. The average price for 0.40 to 1.5mm thickness sheet of Kashan product, as the market leader, was USD674/MT during last week. A major change was not seen in this product, and its demand is weak.

 

Ex-rate:
In free market:  Rials 38830/1USD

3rd Sep 2017

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Iran Steel Service Center

IFNAA News & Analysis                                                 

http://www.ifnaa.ir/en/home

Sep 3, 2017 13:02
Number of visit : 863

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