Billet
Billet market was downward during last week in Iran. Billet size 150 mm was offered at USD689/mt on truck in Anzali including 6% VAT, but offered billet level was limited, suppliers mostly were out of market. Domestic billet size 125 mm was offered at USD654-665/mt depending on quality and delivery place. As long products prices were downward, billet transactions level was low. After Esfahan Steel Co sold rebar and I-beam at cheap price in IME, billet price started dropping too. By Wednesday domestic billet producers were more eager to decline their inventory level as they expected more downward trend in billet market.
It is expected that billet price experience a downward movement in coming days in Iran as:
1- Steel scrap price is declining and this trend would continue.
2- Long product prices started dropping by middle of last week and debar price may be lower than USD725/mt ex-work in coming days.
Long products
Long products market was downward during last week in Iran. Selling about 250,000 of debar and I-beam parcels at IME by Esfahan Steel Co at base price of USD665/mt, made long products market drop sharply and any hope for a stable market in coming weeks disappeared.
There are some points which should be mentioned regarding above transaction at IME:
1-These parcels which included 16,200 tons of I-beam and 3,800 tones of debar experienced around 20% decline compared to deals 2 months ago for debar and I-beam.
2-When Debar price reduce by USD40/mt, billet price of domestic producer khouzestan steel mill should also drop in coming transactions to as low as USD624/mt ex-work. Consequently, imported billet price should be lower than USD530/mt cfr Iranian ports to be competitive which is not an interesting price for CIS exporters taking into account current difficulties of importing and coming winter time at CIS region.
3-When debar price reduction make billet price drop possibly as well as USD40/mt in near future, it would be necessary that scrap price decline as much as USD48/mt. But winter is near and scrap supply level will drop. Besides, at the moment Iran steel market is in shortage of at least 2 million tones scrap per year. Though, thinking about a reduction in scrap price won''t be logical.
4-As steel products demand level is low in Iran, such a shocking change in prices will end in stoppage of producers which cannot afford to reduce their prices as well.
5-These parcels which have been bought at IME during last week will come to a market with lack of demand, so inventory levels at warehouses will increase. Cheap parcels at warehouses won’t let price improve even if supply level drop till end of the year ( March 2014).
Market participants believe that long products prices will be downward in near future after last week I-beam & debar deal at IME and debar base price would be around USD717-725/mt and I-beam around USD725-745/mt including 6% VAT.
Flat products
HRC 2 mm thickness was priced at USD796/mt on truck in Anzali including 6% VAT be beginning of the week and finished the week at USD14/mt lower. Other sizes experienced USD2-8/mt decrease in prices due to low demand level. Kavian Steel Co didn''t offer HRP during last week, but may increase offers in coming days. Downward trend in HRC market will be followed in this market too.
CRC supply level from Mobarake Steel Co was limited and some sizes in import market were scarce, but lack of demand didn''t let the market improve and buyers were moving very cautiously. HDG market was also in depressed condition and shortage of demand continued besides low inventory levels.
(Ex-rate: In Exchange Room: Rials 24,841/USD)
Note: Prices have been converted from Rials to USD using exchange room rate as a base.
Iran Steel Service Center