Billet price rose slightly last week from an average of USD 339/mt
to USD 342/mt ex-work including 9% VAT on Tuesday. Khuzestan steel co, offered
its billet at IME ( Iran Mercantile Exchange) and an upward trend was expected. The mill supplied 20,000 tones
and because of cash sale, was faced with 52,000 tonnes of demand, while the mill
was able to increase supply by another 10,000 tonnes. Average closing price was
USD 314/mt, while last week's closing price was USD 316/mt, which is USD 2 /mt
higher and the demand was 30,000 tons higher. Khuzestan steel supply constraint
indicates that on the one hand, billet export continues to have a positive
trend, this is why Khuzestan Steel is reluctant to increase supply in the
domestic market, which is facing a recession. On the other hand, an increase in
supply can lead to lower prices in the domestic market as demand is very
Besides, last year's bitter experience with the steel makers is
ahead, with the average price of billet in October last year being USD 346/mt.
It declined by USD 5.5/mt in November, then downward trend continued till
January 2019 as It reached USD 272/mt ex-work including 9% VAT. But afterward
started rising and by the end of last Iranian year (Second half of March 2019) was
around USD 376/mt.
But market sentiment this year is different from last year as:
1-The stock market last year did not jump as much as currently. Most
of the capital flows from steel market, property market, gold, foreign currency
and other markets has gone to the stock market this year. Though, the proportion
of capital in the steel sector has declined.
2- Last year downward trend was due to the decline in export,
driven by state policies, while global billet demand was high. But this year we
see the contrary as global demand is limited and the gap between export and
domestic prices is not as high as last year.
The point is that with the subsidies given to the steel sector,
steel export is still profitable, so export will continue to grow as the market
Average price of
debar diameter 8-32 mm rose from USD 377/mt on last Saturday to USD 380/mt
ex-work including VAT on Wednesday, due to a shortage of billet and pressures
on export market. Debar production has fallen sharply and many mills have poor
inventory level, but because domestic demand is very weak and global demand is
not much, prices are not expected to recover.
Price of I-beam sizes 14 – 18 ranged from USD 415/mt
to USD 427/mt on Tuesday, but on Wednesday the price declined to USD 426/mt
ex-work including VAT. This was due to two factors: first, Isfahan steel co.’s competitors
with a significant price gap took some part of its market share and, on the
other hand, traders with Isfahan Steel co I-beam in warehouses increased supply
level as were gaining enough profit. Therefore, market price started declining.
Besides, concerns over the price trend of past year have made traders more
Market insiders have
two different views about future of long products market:
First view believes
that in the next few days good demand will enter the market and this will
affect the price and market prosperity.
Second view is worry
about possible downward trend due to authorities market controlling attitude.
This time last year,
debar price was around USD 416/mt, prices started declining by November and
reached USD 324/mt till end of December. Then like billet market, prices became
upward. But this year we see a big difference comparing with last year as
neighboring countries as traditional buyers of Iranian long products are facing
with recession, therefore, export significant improvement seems unlikely.
During last week HRC 2 mm thickness was faced
with some downward trends. Mobarakeh Steel co HRC 2 mm thickness declined from
USD 450/mt ex-work Isfahan including VAT to USD 483/mt as the mill’s HRC price
at IME declined. Ahwaz Rolling and Pipe co product declined just by USD 4.5/mt
to USD 480/mt ex-work Ahwaz including VAT.
Slab export is still booming, which does not
allow the price of slab-related goods to decline significantly. But for
Mobarakeh Steel co which produce its own slab, situation is different. However,
the average price of Mobarakeh Steel co HRC thicknesses 3 to 15 mm, which was USD
497/mt on Saturday, reduced to USD 490/mt over the weekend.
Oxin Co HRP was faced with the same trend and
was priced at USD 484/mt on Saturday, reaching USD482/mt by the end of the
week. Kavian co HRP 12 to 30 mm thickness, like other flat products, declined
from USD 478/mt to USD 475/mt ex-work including 9% VAT.
CRC market was depressed last week in Iran.
Lack of demand for CRC as an industrial raw material shows demand shortage in
downstream industries. The average price of CRC 0.40 to 2 mm thickness declined
from USD 648 /mt to USD 642/mt ex-work including VAT. HDG price like other flat
products was in a downward trend, with the average price falling from USD 725/mt
to USD 714/mt ex-work including VAT. The stock market did not face serious
demand of HDG and its price drop from USD 729/mt excluding VAT a week ago to
USD 656/mt .
weekly average ex-rate for Steel Products (SANA): Rials 110.036 / 1USD
Steel News Bulletin