Billet price remained stable during last week until
Tuesday, but with offers on IME ( Iran Mercantile Exchange), a slight downward
trend began. It declined from USD 573/mt to USD 570/mt by end of the week. The
relationship between the price of scrap, DRI and billet has reduced the profitability
of billet production to a minimum, and some producers are sometimes at a loss.
This has reduced production level too. If DRI price decreases with the pressure
of IME, billet will also fall, and then will end in market stoppage.
Rebar price has reached the bottom like billet. During
last week its average price changed from
USD 652/mt to USD 642/mt ex-work including 9% VAT. Government's
insistence on offering goods on IME and the pressure to reduce its price have
kept the market in waiting mood. This lack of demand has increased market inventory;
therefore, some producers are eager to sell with delayed payment too.
I-beam market started the week unchanged but finally by
end of the week became downward due to lack of demand and lower prices at IME.
Its average price dropped from USD 637/mt to USD 630/mt ex-work including VAT.
Price of 2 mm HRC
ex-work Mobarakeh was USD 1016/mt on last Saturday, which reached USD 1007/mt
by Tuesday. Higher supply level and lack of demand made HRC prices downward.
Oxin co HRP price
fluctuated a little from USD 1091/mt to USD 1084/mt. Kavian co HRP price
finally declined from USD 1032/mt to USD 1030/mt during last week with slab
price downward trend at IME. But mill’s pricing controlled made downward trend
limited. But its resistance against downward trend finally has broken.
Increased supply of
some thickness of CRC made its average price downward by end of last week from
USD 1237/mt to USD 1191/mt.
Despite Lower HRC
price, HDG remained almost unchanged at USD 1252/mt during last week in Iran.
The most important reason is that it has reached the bottom level.
In global markets, Billet and slab price is declining and demand for flat
products will be declining for the next two weeks due to Christmas Holidays. As
oil price no longer has room to increase, so the rising trend of commodities
will not be serious except for food and clothes that remain interesting due to
Christmas time. Rising gas and energy price in Europe will reduce demand level,
so in terms of steel export demand, there is no hope for the Iranian export market
for the next two weeks.
But in the domestic market, all steel production chain are obliged to list
their products on the mercantile exchange ( IME). As IME would be involved in
all pricings, it will become a target to which all criticisms will be fired. The
market will be faced with a recession shock for a period of three to four
months. If after this period the government's policies do not lead to an
increase in production or higher export level, the whole structure will
collapse because it will not be sustainable, and if the government continues
this process for more than a period of 4 months until the end of May, its
consequence would be lower production level. Pricing steel at IME will end in
lower margins and money loss of many mills. Higher energy and gas prices in the
government budget will directly affect steel market and increase production costs.
Therefore, it seems that the government's goal is to continue steel
production at current prices with the minimum profit margin until end of the
year, and to be sure about market inventory level as much as possible so that
when the cost price of steel increases, its impact will not be immediate. All
this is in a situation where the process of nuclear negotiations continues in
the same way. Steel market has been waiting long enough, so it will react as
soon as the outcome of the negotiations is clear, but it should not be
forgotten that the increase in the cost price does not allow price reductions
to be serious even if an agreement is reached.
CBI weekly average
ex-rate for Steel Products (SANA): Rials 242,208 USD
27 Dec 2021
Iran Steel News