In this memo, we examine the most important factors of inflation and unrest in the domestic steel market in the past week. Please stay with Artan Press until the end of this analysis
*** The growth of the Nimai exchange rate is the first reason for the increase in steel prices
An evaluation of the latest data from the Metal Bulletin site shows that in the reports leading to the last seven days of this analytical publication, there was no price fluctuation in the field of ingots and rebar exports, and even the base supply rates for next week’s outlook on the Commodity Exchange. The increase in the dollar rate has been halved.
*** Stability in Metal Bulletin reports from Iran Steel
Therefore, the most obvious and main reason for the increase in prices, despite the lack of changes in the detailed reports of Metal Bulletin from the Iranian export market, is the slight changes in the exchange rate, which has created the fastest response to recent movements in the steel market. Therefore, with the growth of the exchange rate on the one hand and the decrease of the purchasing power of the domestic consumer on the other hand, this week due to the lower rate of the final product compared to the rate of the commodity exchange; The final product offerings were not well received on the Commodity Exchange
*** Steelmakers pricing in the corner of the ring
In connection with the unbridled prices in the first half of this year in the domestic market; Especially in the rolling field, it led the steelmakers to not supply enough ingots and raw materials in the commodity exchange and sell outside the rules in the open market, and the second reason was the supply of ingots in the commodity exchange in the first half of the year, which was a heavy blow to stability. The prices hit, but no measures have been taken to fix them to date. In a way, in this sector, the steelmaker is the first accused of increasing the price of steel inside
*** Matching domestic steel deals; rising prices
The parallel market and the free market provided a safe haven for speculation that the issue of steel trading matched became a catalyst for the staggering rise in steel prices in the free market. The final product provided all the ingots purchased from the commodity exchange and sold the rest in the open market. They claim that the insufficient supply of the final product in the field of rolling in the commodity exchange and the free sale of other channels in the steel chain have created this situation and we are witnessing a sharp increase in prices in the field of rebar, corners, steel ingots and beams.
*** Non-fulfillment of steelmakers’ obligations
Field studies show that not all challenges can be addressed to the steelmaker, and the claim of both steelmakers to acquit themselves and their production channel based on the available evidence is apparently true; However, it is noteworthy that neither of the two major steel producer groups in Iran has complied with the commitments and announcements of the Ministry of Silence to date. This has made it possible to easily trace the traces of rising prices and the main culprits in this area. Specified. But in the current situation, looking for the culprit is probably not the best current scenario for the steel policymaker.
*** One hundred percent producer benefit from domestic steel pricing
Determining the base rate of supply of steel products in the commodity exchange based on changes in the dollar exchange rate this year according to the latest method of regulating the domestic steel market and changing the latest method of regulating the steel market to the current method was an approach that will benefit all major Iranian steel suppliers. The issue should be at the top of policymakers’ priorities. In the current method, the existence of any domestic consumer protection will depend on the supply situation in the market, and this issue can be easily sidelined by the manufacturer.
*** Central bank pressure to return the steel export currency
Another important factor that led to the sharp rise in steel prices was the central bank’s pressure on steel producers and exporters to return export currencies in a short period of time, which put a lot of pressure on exporters and on the other hand a large part of their revenue sources were not cashed. By putting pressure on the domestic market, the exporter sought to provide the necessary currency to return to the central bank. This issue put severe pressure on the market and the result is a sharp rise in prices for all steel products in the country.
*** Weak supervision in the domestic steel pricing process
The very weak supervision of the Ministry of Silence and a kind of exclusion of the domestic steel market from periodic price assessments from the highest part of the steel chain to the lowest and most detailed steel trading institutions was another big mistake that caused confusion in steel prices in Iran these days. .
*** Irrational export of steel ingots
Another important reason for the unbridled high prices of domestic steel is the policy-making orientation towards the export of Iranian steel ingots. The best case scenario for a domestic producer in the current situation is the export of steel ingots at prices approved by the Ministry of Silence. Therefore, this method of export has caused a severe shortage of steel ingots in the domestic market.
*** The desire of the steelmaker to export steel ingots
In the current situation, the domestic manufacturer will not sell steel ingots in the domestic market below the price calculated below the half dollar rate, and in practice, the base rate price of the stock exchange offers to support this demand and will cause the volume of supply in The domestic market will undergo drastic changes and the distribution of ingots will be reactivated. With the decrease in the supply of steel ingots to the country, the export process will resume and we will again see exciting days in the steel ingot sector with a two-day delay in all steel markets.
*** Predict the recession in the domestic steel market
Continuation of the stagnation trend in the domestic market with irrational prices will not benefit the consumer in any way, and with the continuation of this path, the steelmaker will practically enter the scenario of non-compliance with supply Steel will enter the market with a constant volume, and this will lead to an upward trend in the prices of all steel sections in recent days
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