Billet: The dormant supply and demand of previous weeks caused a surge in billet prices, primarily driven by fears of power outages.
Long Products
Rebar: The increase in billet price and severely limited supply led to an explosion in rebar prices, but the market calmed down after Wednesday.
I-beam: A stimulated market combined with supply management sharply increased the price of beams.
Flat Products
HRC: Inflationary expectations stimulated the market and led HRC price increases. Downstream, demand is weak due to power outages.
HRP: Power outages, coupled with an increase in slab prices, were the impetus for HRP price rise.
CRC: The increase in hot-rolled coil prices and inflationary expectations drove up the price of CRC .
HDG: The rising price of HRC also led to an increase in HDG price.
Weekly Analysis:
In the world market: Nothing special has happened in the global market; oil is hovering around USD 60 and shows no signs of increasing. The only significant news is the declining trend of domestic oil production in the United States, which will lead to increased investment in US coastal areas. However, this trend won't happen overnight. Billet price remained relatively stable at USD 435/mt FOB Black Sea and USD409/mt ex-works Chinese mills. Iranian billet was traded at USD430/mt last week. Scrap price also remained relatively stable.
No factors indicating a change in the steel market are foreseeable in the short term. The Chinese are circumventing US sanctions by selling their goods to the US under DDP (Delivered Duty Paid) or DPU (Delivered at Place Unloaded) terms, where the seller pays customs duties. In the near future, tax evasion and customs duties will burden the US tax system. The Chinese government provides more than 20 types of subsidies for steel, from iron ore to delivery at the buyer's port. Therefore, the only way for the US is a complete ban on steel imports from China, as it is simply not possible to compete with the Chinese.
In the domestic market: At report of May 10th we stated that the power problem would reduce supply and increase prices. This is exactly what happened with the Ministry of Interior's letter announcing a 15-day shutdown for steel and cement industries. The atmosphere created by this letter, combined with limited billet supply on IME, excited the market. The consequence was a limited supply of billet, slab, and rebar on the commodity exchange. Currency fluctuations fueled this atmosphere and caused a ten percent price jump. Although prices retreated at the end of the week due to buyer caution, the outcome of past events prepared the mindset for 35,000 Toman ingots and 40,000 Toman rebar. The astonishing increase in cement prices also justifies these prices.
The electricity issue is a reality. Government is trying to calm the situation through various tactics. The plan to buy electricity from neighboring countries is one of them, but at what exchange rate? Furthermore, the base price of electricity in neighboring countries is much higher. Therefore, considering the transmission costs that go to the Ministry of Energy, it is practically not economical. The electricity issue is a hot topic of discussion, with talks of 6 to 24-hour outages. This year's deficit is 25,000 megawatts, meaning at least 30% of consumption, and this deficit will increase next year.
The reduction in production due to energy issues leads to an increase in production costs, which will ultimately result in a lack of profitability and a rise in the exchange rate. In the current situation, production is not only under pressure from electricity. There have been discussions that steel and petrochemical industries should take over and equip some gas fields for winter to secure their gas supply. This means higher investment costs, which prices will have to bear.
Finally, there are rumors that drivers are pushing for increased fares due to diesel quotas and insurance rates. The culmination of all these factors is price increases and recession.
CBI average ex-rate for Steel Products (SANA): Rials 685,622/ 1USD
26 May 2025
M.Chitsaz
Iran Steel News Bulletin
IFNAA.IR
IRSTEEL.COM