Billet
Billet price was up last week in Iran.
Average price of sizes 125 and 150 mm was USD 386/mt ex-work including 9% VAT
on Saturday, which reached USD 392/mt by Monday last week. Trading on Tuesday
was also sporadic due to Wednesday's market closure for Mourning Holiday.
Reasons behind the increase in billet price were higher exchange rate and the
severe DRI supply restriction. DRI production is facing with problems due to
rainfalls and this has made the limited supply of pellets tighter. The limited
supply of DRI has stopped some billet mills from producing. The latest base
price of DRI has been heard about USD 226/mt but deals are very limited as it
has a significant gap with billet sale price.
There are two views about billet price
trend:
The first view believes that billet price
trend will be downward as we have seen in the past two weeks that billet
producers were not able to achieve enough sales in the same way as they did a
month ago and at base price of around USD 386/mt would have slower sales as
price difference of rebar with billet is not attractive for re-rollers.
Besides, the liquidity pressure to buy billet for re-rollers has increased
severely. DRI quota can lead to lower billet price as DRI buyers would be
obliged to offer their billet production at IME (Iran Mercantile Exchange). An
increase in billet supply at IME will definitely lead to a decrease in its
price.
The second view thinks that with the heard rumors about free
trading at IME, we would see a price increase again, as activation of billet
empty capacities means more demand for DRI and an increase in its price and
will definitely make billet price higher.
Besides, another issue that is currently
hidden and will reveal in the next couple of weeks is the impact of the Coronavirus
on steel deals. This has had serious pressure on global stock markets, which
has led to lower iron ore and billet price. On the other hand, the downward
trend in scrap price will affect the export price of billet as it has declined
by about 4% in the past 10 days. If
Iranian billet exporters face with lower demand level due to Coronavirus, their
domestic supply level would rise.
Long
Products
Average price of rebar was USD 419 /mt on
last Saturday, and reached USD 432/mt by Tuesday mainly due to higher billet
price and its limited supply level. The purchasing power of re-rollers has been
limited as a result of higher billet price. Therefore, their production level
has declined except for mills capable of trading on IME. However, the last price of Khuzestan steel co
billet price at IME reached above USD 394 /mt, which is not far from rebar cost
price.
The average price of I-beam sizes 14-18
which was USD 513 /mt ex-work Esfahan on Saturday, rose till Monday but dropped
to USD 511 /mt on Tuesday. Some market insiders believe I-beam price has no
more space to improve due to the volume has been sold at IME during last two
months.
Flat
Products
Last Saturday HRC thickness 2 mm was USD 512/mt
ex-work Esfahan and USD 579/mt in Ahwaz which reached USD 599/mt in Isfahan and
USD 562/mt in Ahwaz over the weekend.
The average price of 3 to 15 mm thickness
HRC from Mobarakeh Steel co which was USD 653/mt on Saturday, reached USD 668/mt
by last Tuesday. Many traders prefer staying away from this market due to the
risks available.
Oxin co HRP thickness 10 to 40 mm on
Saturday was at USD 645 /mt, which reached USD 667 /mt on Tuesday, as a result
of severe supply constraints. This trend has made traders too much cautious.
CRC market passed last Saturday and
Sunday waiting for Mobarakeh Steel co offers. On Monday some offers were
available in the market. Average price was USD 863/mt last Monday, which
reached USD 869 /mt by Tuesday. This trend is not attractive for CRC consumers
and they buy just to satisfy their immediate needs.
HDG thickness 0.40 to 1.5 mm was USD 783/mt
by beginning of the week, then reached USD 802/mt ex-work including 9% VAT on
Tuesday. The increase in HDG price was more affected by the increase in the
price of HRC and also higher ex-rate which influenced zinc price.
CBI
weekly average ex-rate for Steel Products (SANA): Rials 121.782 / 1USD
03 Feb
2020