domestic billet market was quiet during last week. Average price was around USD
599/mt ex-work including 9% VAT. Scrap price and its limited supply level did
not allow billet price to decrease.
Rebar market was quiet and almost stable. It
started the week at USD 672/mt and finished it at USD 667/mt ex-work
including 9% VAT. Mills mostly were
facing with limited billet supply.
Lack of demand made I-beam average price downward
from USD 692/mt to USD 679/mt ex-work including VAT.
Price of two
millimeter thickness HRC ex-work Mobarakeh on Saturday was USD 1138/mt, which
reached USD 1073/mt by Tuesday. Mobarakeh Steel co HRC prices had a downward
trend due to its supply level and fear of traders. But prices are near the
bottom and this trend would not be stable, otherwise the mill will face with the
problem of selling its products at IME. This would be an important issue in coming
Oxin co HRP price hit
its bottom level last week and decreased from USD 1146/mt to USD 1135/mt by end
of the week. Some traders interrupted the market trend with special offers at
base price of USD 987/mt excluding VAT with delivery within 3 months. We have
to wait for the coming weeks for HRP market trend to be clearer as higher
export level of slab has made its domestic supply limited too.
Kavian co HRP decreased a little from USD 1102/mt
to USD 1088/mt. Market recession made price downward, but the mill managed
downward trend from USD 1270/mt to USD 1245/mt with market recession through
the week. This trend may continue with limited scope next week.
HDG market had an almost
steady trend at around USD 1286/mt. Lower HRC price was partially offset by higher
zinc price in global markets.
Oil price is
approaching USD 100/ barrel which means higher prices for all goods is near as
it raises freight rates and affects power price. As prices rise, it would
increase wages too.
Power outages continue in China, which means higher demand for Iranian
Steel production costs in Europe have increased due to rising oil prices,
meaning that European import demand will rise.
Scrap prices are on the rise, which has a direct impact on steel prices.
In the domestic market, demand has remained limited. Government plans for new
house building would not help steel market any time soon. Therefore, demand is
not an influential factor in the market at the moment.
Ex-rate has remained relatively stable. It is simply not possible to reduce
it in terms of economic principles. In practice, depreciation of exchange rate
completely disrupts the market and reduces export level. On the other hand, it
causes a drop in the stock market index too. Meanwhile domestic market demand is
limited and market can not accept higher supply level.
On the other hand, within next month, DRI production might be affected due
to gas supply issues and scrap supply will also decline in winter time.
In short, supply will become more limited. Export rises as oil prices rise
while demand does not change, meaning higher prices. What is not clear is that how
the government deals with the budget deficit. It has severely restricted monetary
market by selling bonds. This exacerbates the recession, increases exports and
raises interest rates. Continuing this trend is not sustainable because cost
management does not necessarily mean increasing revenue. There are talks of
eliminating energy subsidies to make up for the budget deficit, but the budget
needs other changes, such as a single exchange rate and supporting export
market. In any case, the government must think about employment, which it bears
its burden by itself as more than Eighty percent of our economy is under responsibility of the
Expectation of some market insiders is that with signing of Barjam, ex-rate
will become downward, which does not correspond to economic realities.
Regardless of all these analyzes, economic actors must be aware of oil and gas
prices seriously. Price trend of these goods affects everything. World is
facing with a shortage of gas and winter is on the way as a result of which it
is not possible to reduce prices.
If exports become zero too, it will not be possible to reduce prices in the
domestic market due to costs structure. A recession may only cause prices to
fall at some point when it is not stable. But the continuation of recession
means a reduction in production. If producers can not export what they produce,
have to shut down production lines, which will not be easy to restart.
CBI weekly average
ex-rate for Steel Products (SANA): Rials 232,913 USD
18 Oct 2021
Iran Steel News