Iran’s steel billet export market witnessed limited trading this week amidst news of the Iranian government introducing new policies due to expected inflation in the country and the increasing trend of the exchange rate. As a result of an upward swing in the exchange rate, the domestic market has become the first preference for billet exporters to sell their material, sources informed.
Additionally, as per reports, the country’s Basic Goods Market Management Working Group of the Ministry of Security has mandated the manufacturers of all steel chain products to offer their entire production in the commodity exchange by the end of May of the next Persian year, which is seen as a serious blow to the steel export market.
“Currently, there are issues with exchange rates. The Iranian government is bringing new policies”, a Middle East-based trader source told SteelMint.
“The market is mostly looking at the ex-rate trend. Production will definitely increase but price issue is another thing”, said an Iranian source.
Less number of firm offers currently in the export market and power curbs due to harsh winter in the region have also weighed on trade activities. However, an Iranian steel mill has concluded an export deal for 30,000 t of billets at around $554/t FOB for March 2023 shipment. Prices have corrected downwards by $6/t against the last deal.
SteelMint’s latest assessment of Iran’s billet (3SP) export prices stood at around $558/t FOB on 21 February, unchanged, w-o-w.
Domestic billets, rebar prices rally continues
Steel billet and rebar prices continued to head north amid inflationary pressures and an uptrend in the exchange rate. In the domestic market, the production bottleneck has reached its peak due to the pressure of gas shortage which also keeps prices supported.
However, the cancellation of recent billet transactions at the Iran Mercantile Exchange (IME) by the Iranian authorities was done with the hope that the market will witness fresh supplies of billet leading to a decrease in domestic prices.
Domestic trade on IME rises manifold
Domestic billet sales on the IME saw a whopping increase of 1037% w-o-w. Meanwhile, the average sales price increased by 13% w-o-w.
Around 153,000 t of billets were traded on the IME in the week under review at an average sales price of 203,674 Rial. Last week, about 13,450 t of billets were traded at an average sales price of 179,656 Rial.
Outlook
Iran’s semi-finished steel export prices are expected to remain supported because of limited offers in the market with billet exporters turning towards the domestic market. Moreover, the country is facing a severe energy shortage and the government’s recent announcements about controlling inflation and increasing exchange rates are likely to affect billet export allocations.
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