Billet
Last week billet market like other steel products was influenced by exchange rate fluctuations and market stagnancy. Billet Size 150 mm was around USD923-940/mt on truck in Anzali. Exchange rate fluctuations and ambiguities in future market trend made sellers out of market. It increased to USD1060/mt on Wednesday, and then dropped again after government announced new exchange market system. But the drop in billet price was limited due to following reasons;
1-Absence of big traders in the market; Last week market was almost closed due to holidays on Sunday and Thursday.
2-The current billet price in domestic market is the same as importing at USD1/14,000 Rials, so there is no space for significant decreases.
Some market participants believe that as consumption level is dropping due to end of the year coming, during next 2 months billet price will drop. Besides during last 2 months, import level has increased significantly. Some others think that production level has dropped and sections prices are upward. In import market last month ambiguities increased and we can say real trend of billet market will be clear in next Iranian Year (20th March onward) but surely prices won''t get back to last month''s levels.
Long products
Long products prices were upward during last week in Iran. By Saturday, after rise in exchange rate, sections prices were up between USD17-45/mt and On Monday by USD 27-45/mt . By Wednesday steel mills increased prices by USD53-89/mt and made traders more and more confused. Market participants had no confidence in the upward trend as real demand is scarce. Transactions levels were limited and after announcement of new policy of government in exchange market, steel market became calm. After offers from warehouses in Tehran increased, buying interest dropped and made prices drop by USD27/mt on Wednesday. By end of the week the downward trend continued but especially for prices offered by traders in Tehran, Steel mills didn''t decrease prices on Thursday, as their sale price is near cost prices especially for small mills dependant on billet. So they can''t afford drops in prices. Any way at the end of the week section market was full of sellers with no interest in buying. Real demand level is so low, so if the trend continues, market will face a depressed situation. Meanwhile parcels purchased in IME during November end till December end, will come to market within next weeks, if exchange rate drop more, as steel mills will be in need of liquidity at the end of the year, they would decrease prices but it wouldn''t be so much for small mills.
Flat products
Last Saturday, 2 mm thickness HRC was priced at USD940/mt on truck including VAT in Anzali.
By Monday it was upward and reached USD1,020/mt on Wednesday in Anzali. But by Wednesday afternoon market trend was reversed and on Thursday the minimum price was USD976/mt.
The product import level has been upward during last 2 months, so if exchange rate stabilizes, any drop in offer prices is unlikely. Mobarake Steel HRC product was up by USD18/mt during last week. For Oxin and Kavian steel mills products, as big traders were absent, their prices were up by USD27/mt but by end of the week dropped again.
CRC market was upward and by Monday prices rose by USD89/mt . By Wednesday as exchange market trend was not clear, sellers preferred to stop offering. CRC import level during last 6 months has dropped significantly and Mobarake Steel supply level was not enough for market demand. Besides, HDG import level has dropped too and made CRC demand increase. As current prices are close to cost prices, so any drop in coming weeks would be limited.
At the moment Iran flat products market is full of ambiguities. A view believes that prices are becoming stable and market will became depressed due to:
1-low demand
2-selling at lower prices because of liquidity shortage
3- Waiting policy of some market participants and avoid buying
The other view thinks prices won''t drop as:
1-During last 2 months import level has dropped heavily due to LC opening problem
2-Exchange market volatilities have made investors more interested in exchange and gold market, so many investments have been out of steel market. During coming months supply level will drop.
3- Due to financial problems regarding letters of credit, it may cancel shipment of some opened LCs, so supply level will drop more
We can say both views will have one result, that is wait and see policy. Imbalance has made traders work at minimum possible levels, so if the balance comes back to market, improvement would be achievable.
Iran Steel Service Center