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