On government’s intervention in setting up the steel prices, the head of Tehran Chamber of Commerce, Industries, Mines and Agriculture (TCCIM), Mr. Masoud Khansari, wrote a letter to Mr. Mohammad Nahavandian (Vice President, Economic Affairs) asking for setting up a committee, comprising of TCCIM and Iranian Steel Producers Association (ISPA) to revise steel pricing guidelines.
- The key highlights of the letter are-
As per recently announced regulations, steelmakers are obliged to sell their products at the IME 25% below world market prices. It has created high volatility in the steel market and artificial demand due to lower IME prices.
- While policy and decision-makers ostensibly take such measures to reduce the final offer of steel in the domestic market and support end consumers, in essence, such moves have had the opposite effect.
- Khansari warned that the new pricing mechanism could pour IRR 800 trillion of easy money into the pockets of dealers and the army of middle-men.
- He described the interventionist approach to the steel market as “a serious threat” to the production and export of the major commodities.
- He also pointed to the new regulations on the steel billet exports could undermine contractual obligations of steel companies to foreign buyers.
- “Steel billet accounts for 70% of steel export,” he recalled. He further added that such an ill-advised policy is incompatible with the country’s oft-mentioned trade policy that lays extra emphasis on non-oil exports and weans away from volatile international crude prices.
Source: Financial Tribune
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