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Iran Steel Market Trend in Week 22nd, 2022

Iran Steel Market Trend in Week 22nd, 2022


Billet price was downward during last week in Iran steel market. It’s average price dropped by USD 2/mt to USD 648/mt ex-work including VAT. The recession in rebar market and, more importantly, government's pressure to reduce prices at IME (Iran Mercantile Exchange) were the main reasons behind this trend. Government's policy made billet supply level at IME 50% lower than a week ago, and sales with delayed payments also stopped. Over the weekend, power cuts and rising exchange rates prevented further price declines.

Long Products

Rebar price fell in the first half of last week, but then the market resisted against further decline. Average price dropped from USD 736/mt to USD 734/mt. Power cuts, rising exchange rates and market negative sentiment against effectiveness of government policies were the main reasons behind stoppage of downward trend.

I-beam had a stable trend and showed a slight improvement over the weekend by USD1/mt to USD 676/mt. Market situation was the same for rebar and I-beam.

Flat Products

HRC 2 mm thickness ex-work Mobarakeh was USD 963/mt on last Saturday, which reached USD 946 /mt by Wednesday. Heavy supply of Mobarakeh Steel co at IME, following cancellation of the deal and its renewal with new conditions, gave market the view that downward trend for Mobarakeh co HRC would be limited. Buyers who had bought at IME started pre-selling their goods to be traded on IME, and because of this, market was declining, but most of those involved believe that prices will rise again.

Lack of demand has pushed Oxin co HRP to its lowest price. The only factor that may affect the market of this product is lowering price by the mill, but the main problem is that the mill has not delivered previously purchased goods yet.

With Mobarakeh Steel co supply, CRC price began to decline from USD 1211/mt to USD 1205/mt, but higher ex-rate prevented further price reductions.

Lower HRC price affected HDG market too, but higher ex-rate, which caused the price of zinc to rise, disrupted HDG market too. Its average price dropped from USD 1211/mt to USD 1195/mt ex-work including VAT.

Weekly Analysis:

At the moment on the demand side, market is confused and has no decision-making power. The signals heard from unofficial sources close to the government indicate a decrease in the base price of DRI and billet at IME to USD 343 /mt and USD 529 /mt respectively in the near future. Billet producers will resist against this trend because they are still producing with USD 388/mt DRI stock.

IME announced that DRI price in the coming days would be USD 371/mt excluding VAT, which shows a decrease of USD 21 /mt, compared to last week. It seems that the government is lowering DRI price to USD 343 /mt and billet to USD 529/mt. Besides, in the last tender of Khuzestan steel co, billet was heard USD 560/mt fob, so no price increase is expected from the supply side. It seems that the government is insisting on price floor at IME and imposing it to the spot market.

Of course, these policies are experienced in other commodities and the result is clear. The first effect is that producers will withdraw from the stock market and turn to the non-stock market, and if further resistance by government, they will stop production.

But there are two phenomena cited by the market affecting demand side. First, power outages that will directly affect billet production and reduce supply level, small producers who are a kind of market regulator would be most affected by this process.

Another issue that affects the market would be opening of Chinese market. With the opening of Chinese market, transactions will be activated not only in China but also in other Asian markets from Singapore to Indonesia. Naturally, CIS billet price, which is a basis for pricing at IME, will rise.

The third issue that affects the steel market is the political issues ahead and its impact on the exchange rate. Higher ex-rate will increase profit margins of mills, which in turn will change price of rebar. Any forced decline in prices will somehow neutralized by reducing supply of mills at IME.

CBI weekly average ex-rate for Steel Products (SANA): Rials  242,024/ 1USD

06 June 2022


Iran Steel News Bulletin



Jun 6, 2022 13:59
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