Due to lower currency rate and higher supply
level, inflationary expectations retreated and this caused billet price In
domestic steel market decline from USD 933/mt to USD 814/mt ex-work including VAT.
Lower ex-rate made rebar price downward
from USD 1036/mt to USD 985/mt ex-work including VAT.
Despite the general decline in steel prices, Esfahan
Steel co market management along with talks of halting its production early
next year helped boost demand for I-beam. Its average market price changed from
USD 1386/mt to USD 1468/mt.
Price of 2 mm thickness HRC ex-work Mobarakeh was USD 1509 /mt on
last Saturday, which reached USD 1403 /mt by Wednesday. The talks about the price
of steel export currency, along with lower ex-rate, worried many traders and
caused an increase in the supply of Mobarakeh steel co flat products but
significant decline in prices is unlikely.
Lower ex-rate made HRP market quiet. Oxin co
offered HRP at IME which may have been for the first time, at the base price of
USD 1111 /mt with four-month delivery, gave the market a stable signal, while
slab export market is active and there is no reason for reduction in price. Oxin
co HRP average price in the market changed from USD 1281/mt to USD 1306/mt
ex-work including VAT.
CRC market had a heavy bubble, part of which
was discharged with drop in ex-rate. The announcement of
the base price of CRC together with the stoppage of Mobarakeh Steel co
production at the beginning of next year will not allow this product price to
drop much. Its average market price improved from USD 2130/mt
to USD 2146/mt.
Lower HRC price along with
the decrease in ex-rate, which has a direct effect on Zinc price, caused HDG market decline from USD 2125/mt to USD 2035/mt
ex-work including VAT.
Global markets are active thanks to China and spring coming in Europe, which has
strengthened Iran export market too. According to higher
scrap demand in Turkey, the possibility of price reduction in the next two
months is unlikely. This will activate
Iran's export market from raw materials to finished steel products more, while
the New Year Holiday ( which will began on 20th March) will give mills more space for working in
export market as they will be less involved in the issues and sensitivities of
the domestic market.
In the domestic market, the government is very
interested in lowering steel prices because it achieves several goals by that.
First, it will lower the general rate of inflation.
Second, as domestic market demand calms down, export market will
Third, with the increase in exports and higher currency entrance
from steel export, it would affect exchange rate more strobgly to control it.
Therefore, domestic demand should be reduced
and the only way is to eliminate inflationary expectations and replace it with
a downward outlook on the domestic market. The
government would achieve this goal by
increasing suply of DRI. DRI supply level can reach up to 200,000 tons per week.
Therefore, with higher DRI supply and the downward trend of its price, billet
producers will seek to sell their product even before buying DRI. This policy
will accelerate the downward trend prices, especially rebar, which has many producers,
the downward trend will be very fast and terrible.
Two factors may disrupt the above process
including exchange rate fluctuations and cost price of
products. If gas price goes up, it will have a direct and immediate effect on DRI
price. This affects the entire steel production chain. Re-rollers also need
gas to keep the furnaces warm. Therefore, the change in
the cost price will directly affect the product price, even if the exchange
rate is fixed. There is also an upcoming factor, and that is
the possibility of power cuts from June. If this happens, DRI
price will decrease but billet, slabs and finished products prices will
Therefore, the steel market will not be
encouraging in the coming weeks. But at the beginning of the next
year, its fluctuation will be very intense, especially if the recent resolution
of the parliament regarding the increase in the price of iron ore is approved
in the next year's budget.
CBI weekly average ex-rate for Steel
Products (SANA): Rials 285,000/ 1USD
06 March 2023
Iran Steel News Bulletin