We learned yesterday that the steel pricing policy for reform has been revived, making it harder for producers, buyers and even stockholders. In this memo, we will discuss some of the views of the President and the Commodity Exchange Organization and the head of the Samat Organization. We suggest that you do not miss this note from Artan Press.
*** A major threat to the steel industry
If the steel policy continued, or if something like this were to be implemented in the future, the entire steel chain would be stopped from top to bottom in a few months, even though there is no currency in the country and producers need the currency they need. To provide. Mehrdad Toulaian, referring to the two flaws of the steel method, said: “In general, the existence of the stock exchange is 100% inconsistent with pricing, and rent is created by pricing in the stock exchange. It should also be noted that there is no stock price in the world and The stock market is the market of supply and demand.
*** Heavy steel damage from market regulation practices
Zobahan needs about $ 400 million a year in foreign exchange, which it has to pay for through exports, while this policy has somehow locked the factory and other steels in the country. Another limitation of this policy is that prices The downside was that it had forced the steelmaker to offer its products on the stock exchange at only 70% of the world price, and this was causing speculation in the market.
*** Jahangiri enters the issue of reforming the market regulation method
First Vice President Ishaq Jahangiri issued an order to review and amend the Steel Market Regulation Regulation, known as the Steel Supply and Demand Regulation Regulation. In his order addressed to Dr. Nahavandian, Vice President for Economic Affairs, he wrote that steps should be taken to amend the rules for regulating the steel market so that “no negative sign is given to the stock exchange.”
The order of the First Vice President to review and amend the rules of regulation of the steel market was made following the letter of the Minister of Labor Mohammad Shariatmadari to Ishaq Jahangiri. The Minister of Labor wrote in his letter that considering the 15% share of the steel industry in the capital market, the method of regulating the steel market, in addition to reducing the industry’s exports, will cause serious damage to capital and public trust and economic, social and political insecurity.
*** The entry of the Minister of Labor into the subject of the style sheet
In his request to review and amend the market regulation procedure, the Minister of Labor said that the Ministry of Labor and its subsidiaries have a 20% share of the country’s mines and steel industries and their opinions have not been taken into account in drafting the regulation. In his letter, Shariatmadari requested that the method of regulating the steel market be reformed in coordination with the Ministries of Silence, Labor and Economy, and the participation of large steel companies and organizations in this chain, so that it is clear, transparent, explicit and without the possibility of personal tastes. Be unprofessional and avoid creating rents by some people who are clear examples of this.
*** Lack of practical solution for market stability
Our main problem is that the steels do not have enough supply in the commodity exchange, and if this supply is done, the prices will definitely be balanced. Iran’s economy in the field of steel market is facing the problem of monopoly and supplier restrictions. Upstream steel market players are limited, in which case there should be a tool to manage monopoly power.
*** Lack of transparency in the steel market
Another problem of the steel market is the lack of accurate information. Even the simplest information, such as the amount of production or exports of companies, is not available, and most statistics are estimated or maximally self-reported. The optimization system of the Ministry of Silence has shortcomings; This system is more active in the petrochemical group and is weak in the steel market. We hope that transparency will be established in the field of petrochemicals in the field of steel in order to enable the organization of this market.
*** Distributed rents in the steel industry
In the steel production chain, the more monopoly we move from top to bottom, the more companies, for example, in the production of ingots, the first few companies are almost all markets; But when it comes to rebar, the number of companies reaches nearly a hundred. Today, the middle products of the steel chain are offered in the commodity exchange; If the whole chain is listed on the Commodity Exchange, it will definitely achieve transparency in the production chain.
*** Why should we have energy rents in the steel industry?
Basically, why do we have to pay rent for steel fuel and energy to get it back at the time of sale? Why is this rent paid at all? There are well-known ways to get a rent, the simplest of which is taxation. When you rent a product chain, you increase the tax on it, which does not make much profit.
*** The dilemma of OTC steel trading
In steel, even in commodities required to be offered, more than half of the transactions are done off-exchange, so in the field of steel, both the statistics of transactions, the process of regulation and prices are disrupted. The disagreement in the meeting with the Minister of Silence in the last few weeks was not so serious, perhaps if it were not for the insistence of the Ministry of Silence on broadcasting the videos of the meeting on the radio and television, it would not have caused so much inflammation.
*** Directing steel rents to non-producers
If the rent is given to the upstream company and then we want to deliver it to the consumer through pricing, the profit from the production sector goes directly to the pockets of non-productive factors. In fact, the rent goes to other people who did not play a role in production, and this rent eventually goes to the “kings”, and so a steel shipping company can become one of the largest players in the field after several years of distributing government remittances.
*** The main challenge of transient Steel pricing
The main challenge is not about reducing the coefficient by 10%, but about the pricing principle. When the steel standard was announced, the price on the board was the same as the approved formula, but the problem is that if the recession deepens or the boom returns to the market, how can this communicative formula be maintained, we believe that it should not be a constant price for The base rate was set, but the communiqué was enforced anyway.
*** Parameter of exchange rate reduction in steel pricing
Until the currency started to increase and the demand in the market increased again and with it the global rates, the issue of lowering the base price was raised again, which was not justified and was against the resolution, so we opposed this issue. The Market Regulation Headquarters is a sub-agency and coordinating body that should have a position in the government, but has now become a sub-ministerial committee that completely shapes the form of its decisions, and this position needs to be reformed.
*** The plan of the parliament will not be better than the government
Do not doubt that any plan approved in the field of organizing the steel market in the parliament will not be better than the government’s plan, because with its approval, it will not be possible to change, and unfortunately the impact of the parliamentary research center is not strong The commission is pushing the plan, and it could be dangerous.
*** Government inaction in implementing the steel policy
The implementation of the procedure did little for the government, ie it did not enter into the discussion of the upstream products of the chain, and the executive instructions have not been issued yet, and the Iranian Steel Producers Association and steel companies did not comply with the procedure. This was the biggest damage that caused the parliament to put the reorganization plan on its agenda again.
*** Steel pricing in an aura of ambiguity
Do not doubt that any plan approved in the parliament in this regard will not be better than the government’s plan, because with its approval, there will be no possibility of change, and unfortunately, the impact of the Parliamentary Research Center on this law is not strong. They are pushing this plan and this can be dangerous
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