Iran: Government’s New Directives for Steel Manufacturers to Trade in Exchange

Iran – one of the largest crude steel manufacturer and billet exporter in MENA region is likely to face US sanctions on 6th Aug-18. Ahead of which, the Iranian government has come up with a new directives to safeguard the domestic steel market.

1 – According to Minister of Industries in Iran, Mr. Mohammad Shariatmadari “75% of downstream products including pipe and steel profiles must be allocated to the domestic market before any export. According to the ministry directives, steel producers are instructed to fulfill all of the domestic demand at least 20% more than the last fiscal year through the Iran Mercantile Exchange, before any export.

2 – Iranian steel producers has also been instructed to decrease their prices on Iran Mercantile Exchange (IME) trades at least to an average of CIS FOB export prices (with the formal IRR exchange rate).

3 – This is the third directive published by the government to control the domestic market against increasing inflation. Due to the devaluation of IRR, particularly in the last few weeks, there has been increasing interest in exporting steel but export is restricted and aim is to prioritize domestic supply and export value added steel.

The Iranian Steel Producers’ Association (ISPA), however, do not agree with this directives and the Association going to negotiate with the government. “Domestic demand is not reasonable at the moment and there is a big oversupply that should be exported,” one ISPA member said.

According to Sayyid Rassoul Khalifa Soltani, Secretary of ISPA in an interview criticized the directives prepared by ministry of industries to regulate the market. He said “the ministries hold the meetings with intermediaries instead of steel manufacturers to get the tangible results on steel market, which is why the intermediaries in recent decisions has contributed more than producers. “

Notably, major steel manufacturers of Iran exported around 1.90 MnT of finished and semi-finished steel during the first three months of Persian year.

Inputs from Tasnim News and Chilan Online