Iranian mills target higher billet export prices for fresh tenders

Following the global trend, the billet export offers from Iran have witnessed an increase this week. The mills are targeting the price levels of $415-420/t, FoB Iran. However, the bids for the Iranian billets have not risen in parallel with the offers, which remained stable at $425-430/t, CFR amid falling Chinese rebar futures. In the past two days, the rebar futures at SHFE have dropped by ~RMB 80.

During the conversation with SteelMint, the planner official said, “Iranian mills are targeting $415-425/t, FoB Iran, but it seems less workable given the freight rate of over $30 to China. And Chinese only bid $425-430/t, CFR for Nov’20 and Dec’20 products“.

This week SteelMint assessed billet export offers from Iran to be at $405-410/t, FoB Iran, up by $5 against last week.

Export tenders floating-

• SKS’s 30,000 t billet export tender- South Kaveh Steel, one of Iran’s leading billet exporter, is offering 30,000 t billets through tender for end-Oct’20/early-Nov’20 shipments. According to data maintained with SteelMint, in previously floated tender concluded in mid-Aug’20, the company managed to achieve a price level of $396/t, FoB Iran.
• KSC 30,000 t billet export tender under negotiations-Khouzestan Steel Company (KSC), Iran’s leading steel exporter, has invited the bids to export 30,000 t billets by end-Oct’20/early-Nov’20. The company’s expectations are at a price level of $415-420/t, FoB Iran. In previously floated tender, the company managed to achieve a price level of $405/t, FoB Iran. After a recent hike in global scrap prices, mills are trying to conclude export deals at increased offers. However, the tender is still under negotiation.

Future outlook: Due to the deterioration in the Chinese rebar futures market, billet deals at current price levels (above $410/t, FoB Iran) is challenging. The prices are likely to remain at the current level or may get push backed a little in Sep’20.

Domestic billet prices rise in recent trades at IME- Iranian domestic billet prices have witnessed a decent rise in a recent trade event hosted by the Iranian Mercantile Exchange (IME). Yesterday, around 83,000 t billets traded at an average price of IRR 90,927/kg ($423/t), up by IRR 1,367/kg, against the previously concluded deals.

According to market participants, there is no real demand in the Iranian domestic market. The majority of the demand is due to speculation. Since IRR is continuously falling against $, therefore people are exchanging their money with the steel commodities. Also, due to the Nima $ rate increase, the domestic billet prices are likely to go up next week.