If the government intends to support the export of mineral products and even the export of steel products, it must abandon the grammatical rules, because grammatically the same thing happens with steel and the steel chain cycle that we experienced two years ago.
In all countries of the world, when the devaluation of the national currency occurs, there is a good opportunity for exporters to take advantage of the difference between the domestic currency and the international currency.
In recent years, countries such as China and Japan (early 2000s to 2010) have used this method to devalue the national currency. At the time, Japan was the world’s second-largest economy, followed by China. By using the yuan devaluation method, China has significantly increased its export volume, which has been repeatedly protested by the United States in the last two years.
*** Check the conditions of merchants
Keyvan Jafari Tehrani, Master of International Markets: This event will inevitably have a negative impact on a country’s national exports in cases beyond the control of governments; But in the case of Iran, given that the devaluation of the national currency is not controlled, it should not be forgotten that currency fluctuations are extremely damaging. It should be noted that foreign buyers who buy Iranian goods are fully aware of what is happening to the country’s economy in the face of oppressive sanctions.
In this way, they obtain the necessary information through exchange offices when making money exchanges, and when they see the trend of rial value decreasing, by weakening the rial, they bargain on this issue in their future purchases when paying money. What is certain is that the pressure of this bargaining is put on the seller and they are finally forced to accept.
It is mainly discussed by the author to examine the conditions of traders in the field of export of minerals and mineral products; However, given the economic currents that have occurred under sanctions, the issue can be extended to other industries.
In the meantime, considering that both the mining and steel sectors are of high importance and are linked by chains, therefore, export activity in both sectors can be important for traders.
However, the business cycle of value chain mining differs from that of the steel sector; In the field of steel, global prices and benchmarks against al-Qaeda are considered by global actors in the field, and therefore in business, they can be persuaded by further negotiation with buyers to use world prices as a reference.
*** Export of mineral products
Another difference regarding the export of mineral products is that the income of the mineral exporters of this part of the chain is much less than what is imagined; So that even with this income, they are not able to invest in development processes in the mineral sector of the value chain.
Of course, the main problem at the macro level of the economy is sanctions, and we are witnessing that these oppressive sanctions are becoming more acute day by day. On the other hand, China, as a trading partner of Iran, has not cooperated in the purchase of mining products and mining industries for some time. Following this, Conlon Bank has reportedly cut off financial relations with Iran since the beginning of sanctions imposed on the two sectors of mining and steel, which date back to two years ago. Recently, it has been observed that many Iranian ships carrying clinker, steel and products such as iron ore derivatives have had problems unloading cargo.
This issue is more effective in exporting mineral products; It has been observed that in the export of containerized goods such as chromium ore to China, exporters using Iranian ships face difficulties in unloading cargo. When the export of mineral products is in trouble, it is also a problem for the producer of mineral products. However, they are not always the manufacturer and exporter of a single company product, and two or more companies may be partners, but it is obvious that the problem of one of them can be transferred to the other.
*** Export of steel products
If the government intends to support the export of mineral products and even the export of steel products, it must abandon the grammatical rules, because grammatically the same thing happens with steel and the steel chain cycle that we experienced two years ago. We now see that the export of sponge iron is practically impossible; This form of order regarding sponge iron and its supply in export markets has been problematic for the past two years, and we see this event from time to time to control the domestic market. So that the domestic steel market is not a real consumer market and now we are witnessing an emotional fever to buy steel inside and outside the stock market, which shows the willingness of traders to buy and store this product due to the growing price of such products. Has products.
Merchants at this point in the economy argue that the national currency is weakening, and they believe that it would be better if they bought and stored goods instead of saving money. On the other hand, the results of transactions in the commodity exchange do not necessarily reach direct consumption in construction. For some time now, we have been witnessing a rise in property prices, but construction is not a regular occurrence. That is why the government has taken control of the steel market on the pretext that the domestic market is thirsty for steel. I do not think this is the right thing to do, because the Chinese are now inclined to buy steel. In this regard, we can not be sure that China will always have a purchase request.
*** Increase steel production and supply after Corona
On the other hand, forecasts indicate that when the economic situation affected by the corona in Europe, the Far East and the Middle East (ie in 2021) improves, the ratio of steel production and supply will increase. Meanwhile, China is again reducing production, reducing purchases and reducing imports will do.
Therefore, we must make good use of the current customer conditions for the products. The remarkable thing is that every grammatical action; The reduction of the exchange rate or the rules regarding the non-export of the product have a very strong effect on the production of mining products and the mining industry, and this effect is directly felt in exports and ultimately affects the production of products in this area. This means that the relationship between production and export is a function of a ping-pong movement.
Another point to be aware of is the limitations of the current state of the business sector; Most businesses that buy from Iran are private and generally not government-owned, but they run a great deal of risk by buying products from Iran.
However, there is no opening of documentary credit for them in favor of Iranian exporters. Despite such risks, they have to pay in cash, which requires a high level of investment. The bank has an important role in raising capital when it is possible to provide documentary credit, but when paying in cash, the investor must bear the full amount of the investment. Now, if they are supposed to buy according to the rules and buyers are prevented, the result is discouragement for buyers.
*** Exports of sponge iron
If we stop exports on a case-by-case basis and they are not able to shop continuously, so that the tastes of export barriers are removed and left, it is a mistake to expect traders to choose the destination of Iran again. Regarding the export of sponge iron, we saw that Oman and India used to buy this product, but as soon as the government intervened, the work stopped and if at this time the government releases the export of sponge iron, the previous buyers will not show any desire, why? They have changed the destination of the purchase due to the non-continuation of the purchase process. It should also be noted that sponge exports to Turkey started last year, but were stopped due to restrictions.
Thus, with such dictatorial decisions, Iranian traders have unfortunately lost markets that they have focused on for years as an export target. The instability of government laws causes losses to Iranian and foreign companies and traders, and this causes their desire to buy and export minerals along with Iran’s export position at the international level to disappear.
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