Iranian mills hold back billet export sales as bids fall in recent tenders

The sharp plunge in Chinese steel futures has turned sentiments bearish in the Iranian billet exports market. According to data maintained with SteelMint, the SHFE rebar futures contract for Oct’21 plunged by RMB 729/tonne ($113/t) week-on-week (w-o-w) to close at RMB 5,186/t ($806/t) on 20 May’21.

“We had floated a tender for 60,000 t of billet and slab exports. We were expecting $700/t FoB for the billet tender but with a decline in Chinese steel futures, bids have come down sharply. We are yet to conclude the tender,” a source from an Iranian mill said.

In conversation with a few more Iranian mills, SteelMint learned that they do not have enough allocations this week and, hence, are not chasing exports.

SteelMint’s bi-weekly assessment for Iranian billets was at $685-690/t, FoB Iran, on 18 May’21.

Confirmed deals

• Arfa Iron & Steel sells 30,000 t of billets to China: Arfa Iron & Steel, one of the leading steel exporters of Iran, , reportedly sold 30,000 t of billets to China at $695/t, FoB for June’21 shipments. The deal was concluded at the end of last week, before the sharp decline in SHFE steel futures, SteelMint learned from sources.
• In another deal concluded for South East Asia, the mill achieved a price level of $684/t, FoB Iran. The shipment is likely to be scheduled by June’21.

Iran eases restrictions on steel slabs, billets exports: Iran’s government has eased restrictions on exports of semi-finished steel, SteelMint learnt from latest reports. The Ministry of Industry, Mines and Trade has agreed to remove bureaucratic barriers on exports of slabs and billets. The terms of regulations are same as those for exports of finished steel items that came into effect on 15 May’21. Steel mills will have three months to sell semis abroad without additional export checks. Iran reduced semis exports by 10.8% to 6.16 million tonnes (mn t) from Mar’20 to Mar’21, as producers had to offer products on the Iranian Mercantile Exchange.

Outlook: Currently, the bid-offer disparity for Iranian billet exports is heard at around $15/t. However, it would be interesting to see how things pan out in the near term.