Iran’s Currency Depreciation – Conducive for Exports, Adverse for Domestic Market

Iranian Rial continues to depreciate as against USD, during the beginning of week, conversion of 1 USD to IRR was noted to be around 42,900, it continued to fall and reached IRR 44,200 towards the end of week. Money depreciation is motivating big manufactures to shift towards export market for better realization.

Iran domestic billet price continues to fall owing to low demand of billet in domestic market. During the beginning of week, billet price was noted to be around USD 446/MT (IRR 19,730/KG). Prices continued to fall by reaching around USD 440/MT (IRR 19,470/KG). Towards the end of the week billet price was noted to be around around USD 439-440/MT (IRR 19,410-19,460/KG).

As per market experts “At the moment big Iranian billet producers are active in export market and small mills are working in domestic market. Till ex-rate is upward and export demand is available, this situation won’t change. But Chinese Lunar New Year Holiday is near and some declines have been seen in global billet markets. If Iran export level drop, exporters billet inventory would get back to domestic market and make small mills billet price cheaper.”

As per another market source “the recent hike in billet price has affected the market as well as the demand for billet in domestic market is low”

During week 2 of 2018, scrap was traded at around USD 332-342/MT (IRR 14,690-15,110/KG) in domestic market. Difference between scrap and billet was noted to be around USD 98-114/MT during the period. Whereas rebar was traded at USD 506-510/MT (IRR 19,460-19,730/KG), difference between rebar and billet was noted to be around USD 61-67/MT.

Source: Planner
Prices in USD/MT
1 USD =  IRR 44,200

Inputs taken from Planner and IR Steel