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Iran steel market Trend in Week 24th , 2019

Iran steel market Trend in Week 24th  , 2019

Billet

Last week, billet price fell sharply. As long products export level has been declining, billet market was ready for this downward trend from 2 weeks ago. As a result, average price which was around USD 365 /mt ex-work including 9% VAT on Saturday, reached USD 347 /mt by the weekend. Reasons behind this fall include:

1. A sharp decline in the value of the dollar.

With the fall in ex-rate caused by political issues, billet price dropped as much as possible with the minimum competition at IME (Iran Mercantile exchange). Base supply prices at IME fell by USD 27/mt, which gave the market a wait-and-see signal and demand became scarce.

 Some rumors were heard in the market that the drop in the price of billet was a state policy which seems very unlikely. The fact is that billet supply level is more than demand. One mill is faced with high inventory level and others have reduced their production.

2. The prevailing wait and see sentiment of the market worsened billet price downward trend. In fact, the Japanese prime minister's trip to Iran had influence on lower prices and declining ex-rate.

3. Lowering demand and price of billet outside of Iran while foreign sellers are looking for customers, has made the competitive environment for Iranian billet export more tightening.

4. Lower export level due to Ramadan holidays and seasonal recession in buying countries has led to a drop in demand for billet.

Lower billet price and decline of its demand, have been accompanied by an increase in supply of DRI. This has led to a severe recession in the market of this product.

Gol-E- Gohar Mining co DRI cargo was traded on Wednesday at a base price of USD 155/mt. While the seller was willing to discount more if transaction tonnage increase.

Since supply of DRI is high and its export market is not activated, it's not likely that DRI price improves but with this price, billet price is at the bottom. If DRI manufacturers decline prices, billet price will remain the same, but if export of DRI expands, the excess supply will be discharged. Then billet price will rise. Market insiders were talking about a large DRI cargo that will be confirmed and finalized in coming days. If so, billet market sentiment would improve.

 

Long Products

Debar price was sharply down during previous week. Average price of Debar diameter 8 to 32 mm was USD 441/mt ex-work including 9% VAT on Saturday, declined to USD416/mt till Wednesday. Last week, lowest price of billet was USD 342/mt ex-work including 9% VAT . Therefore, minimum debar price cannot be lower than USD 411 /mt.

I-beam price dropped from USD 423/mt on Saturday to USD 401.5/mt for sizes 14 -18 in Isfahan. Part of this is for the difficulty of loading and delivering of Isfahan Steel co cargoes, which has made deals conditions harder.

Export market limited activity space was the main factor behind downward debar prices, while the fall in ex-rate and wait and see policy of the market helped downward trend more.

Since last Saturday, mills started competitive selling, but they reached the minimum price by Wednesday, so some mills stayed out of market waiting for Saturday.

The events that took place in the Persian Gulf and the responses that Japa received shows that the situation have not changed compared with last month, but market will be cautious. Volume of transactions is expected to improve in coming days but limitedly.

If state policies make export level increase or mills would be allowed to carry out part of the export by Rial payment, export market situation will improve. Otherwise we should wait and hope for an increase in demand outside of Iran.

 

Flat Products

HRC 2 mm thickness dropped by USD 36/mt during last week to USD 557/mt ex-work Esfahan by last Wednesday. Ahvaz origin HRC was down by USD 27/mt to USD 520/mt. Selling at this price is a loss, therefore many suppliers stayed out of market.

Base price for Khouzestan Steel co slab is USD 401.5/mt and Hormozgan Steel co slab is USD 380/mt. With this slab base prices, HRC price of Azvaz Rolling co should be at least USD 525/mt. As there is a large gap between slab and billet price, slab price should be reduced.

HRP thickness 3-15 mm was faced with lower demand and declining prices. Its average price dropped from USD 579.5/mt to USD 557/mt ex-work including 9% VAT. Oxin Co HRP products had better market but its average price dropped from USD 565/mt to USD 539.5/mt. Traders were expecting this decline as part of inventories were moved to the market suddenly after depreciation of ex-rate. Kavian co HRP products had similar trend as Oxin co, but its supply level was restricted last week.

Average price of CRC thickness 0.40-2 mm was USD 721/mt on last Saturday, but by Wednesday it reached USD 706/mt. Supply is limited, but demand is also not significant.

There is no buyer at the moment in the market for high tonnages, but if available there won’t be enough inventory for it. HRC market is also has been faced with this trend for a while.

HDG market had a downward trend and the average price declined from USD 897 /mt to USD 874/mt. The main reason for falling prices was depreciation of exchange rate and its effect on the price of zinc, while demand limitation was also effective in this regard.

 

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CBI weekly average ex-rate for Steel Products (SANA):109,586 Rials  / 1USD

17 June, 2019

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Iran Steel News Bulletin

 

Jun 17, 2019 15:45
Number of visit : 870

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