Implementing the new method of regulating the steel market has long been theoretically introduced in the steel market and many benefits have been proposed for it. In the current situation and one month after the official implementation of this method in the steel market, we will deal with the positive and negative consequences of implementing the method. Please stay with Artan Press until the end.
*** The biggest positive prospects for the implementation of the steel market regulation policy
It can be argued that the greatest positive prospects for implementing the steel market regulation policy are in areas such as domestic market regulation, boosting exports, eliminating brokers and intermediaries, balancing profits throughout the steel chain, and selling products in the market with reasonable price increases. But unfortunately, this is just a coin to implement the style with new prices. Unfortunately, at no point in time has there been a real will to support the distribution system and reform it.
The new steel pricing policy feels like a vacancy in the legislature, and this will make it difficult to implement it consistently. Developing policies without considering the legal status of unions and thousands of trade unions in the distribution system is an issue that can be considered as the biggest challenge and gap of the new pricing policy.
*** Matching export prices and domestic prices in the steel method
The steel market is in a situation where the matching of export prices and domestic prices and pricing of other steel products based on ingots has caused the investment and purchase of steel products from the commodity exchange in the next 8 days, the most profitable business in the current situation. Domestic markets. This side is so attractive that depending on the type of product purchased in the commodity exchange, up to 26% will be given to the capitalist with a fully guaranteed profit. In the Iranian steel market, these conditions have occurred less.
If we add the subject of a 20% discount on the base price, which is part of the 80% coefficient in the policy, to this guaranteed profit, we see the growth of capital in the commodity exchange. The question now is whether this return on investment will put pressure on the market or actually stabilize steel markets. The scope of this question goes back to the discussion of supply and demand. If the supply stops and leads to hoarding and maintenance of steel goods, it is concluded that the pricing method has paved the way for speculation.
*** The correct style sheet at the wrong time
One of the issues with the implementation of the Code is that it was implemented at the wrong time. Implementing this policy as soon as possible can help to eliminate its shortcomings over time, simultaneously with the implementation, by receiving suggestions from individuals, legal entities and various organizations in the chain. But the problem is that this policy should have been implemented as soon as possible. Because in the past, all the activists in the chain were confused.
The issue to be considered regarding the new pricing method is the approach of market prices to real prices and the elimination of potential rents in the Iranian steel market. There has always been a controversy in the steel market that the prices of downstream products priced through the Cadal system have always been accompanied by the objection that prices created the conditions for a loss for this group.
*** Actual prices of upstream products in steel style
The current practice is to bring the prices of upstream products closer to the real prices. According to the definition in the procedure, which is to maintain the relevant discount to sell products, the same discount is proposed in another way to sell steel products to rollers, but in total it takes time for the procedure to be implemented gradually after all Resolve any potential issues raised by some chain manufacturers.
Analysts such as Dr. Hafari Tehrani have expressed hope about the prospects of this steel pricing policy and have expressed their opinion that this policy, in a completely practical and executive manner, should be implemented in such a way that all steel chain producers benefit and are satisfied. Be and be able to continue their activities more than before. Therefore, this method is associated with problems and challenges until the prices are not aligned in the whole steel chain.
Examining the base prices in the style sheet, it can be seen that there was a significant expert error in the base price table of the steel style sheet, so that the base selling price of steel products is sometimes considered up to 41% discount compared to the world price. It is possible that large rents are transferred from producers to buyers and stimulate false demand and declining exports, and monthly prices need to be adjusted quickly to weekly.
*** Required corrections in the style sheet
The pricing policy should be accompanied by amendments that strengthen the export route. But unfortunately, with the expert error in the base prices in the coming days, we will see false domestic demand and a decline in steel exports. It is better to make decisions that direct the steel industry towards exports and provide a platform for producers and consumers to regulate the domestic market so that the product can be offered at a reasonable price in the market.
Iran’s steel prospects are among the best in the region, and the current situation desperately needs a driving force for more exports. The progress of the export of steel sections should not be hindered by bureaucratic decisions. In the last 11 months, the country’s steel has experienced a growth rate of 13%, which is the highest growth rate in the global market.
*** Is reducing the price of steel products on the way?
With rising prices a lot Consumers and investors of the commodity exchange are looking for an opportunity to buy by adjusting prices. But with the base rate pricing error, we are seeing growth in demand, and this path will likely take some time to correct. Some may be mistakenly waiting in line for further price reductions on the buying side
Whereas, at present, according to the available evidence, the determination of the Ministry of Silence to advance the aims of this new method of regulating the country’s steel market has been established; It is recommended that they buy at the bottom of daily prices and do not wait for further price reductions. This can moderate inflation expectations in the iron and steel market and help to implement a more stable steel pricing policy.
Continued implementation of the steel pricing policy is likely to improve prices in the iron ore sector. It is expected that instead of the price ceiling of 50% of world prices, the price floor of 80% of these prices will be considered. . Therefore, despite the unprecedented growth of iron ore prices, we will see a drop in domestic iron ore prices to give the downstream steel chain some opportunity to produce.
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