In the last six months, the government has entered various markets with various instructions and has fulfilled its policy-making role with power but with significant drawbacks. One of the unsuccessful interventions of the government in the field of policy and marketing was the issue of steel pricing and procedures, which then had significant consequences on the Iranian steel market. As a result of these policies, Iran’s steel exports fell by about 15 percent compared to the same period last year. We will discuss the details of this issue in the following. Please be with Artan Press
*** The latest aggregate statistics of the country’s steel exports
The issue that can be deduced from the aggregate export reports of the Iranian steel sector is the significant decrease in world trade in the Iranian steel sector after the government enters the discussion of the steel pricing export policy. The total export of Iranian steel (intermediate steel and steel products) in the first 10 months of this year was 7 million 509 thousand tons, which compared to the same period last year, shows a decrease of 14.7 percent.
*** Experience of self-sanctions in steel exports
Unfortunately, the depth is a place where with a simple multiplication and division account, we can consider the amount of investment lost and the dollar income only because of the obvious example of self-sanction in the steel industry. Unfortunately, the volume of steel exports this year is not acceptable at all and is a long way from last year.
It is enough to add exchange rate factors to these policy shortcomings and shortcomings to double the cost of the missed opportunity. While exchange rate fluctuations could have resulted in very good foreign exchange, at least for steelmakers. Last year showed that foreign exchange earnings in recent months were affected by government restrictions on steel exports.
*** Reduce the volume of steel exports by one million
The decrease in steel exports in the three seasons of spring, summer and autumn in terms of volume is 1 million 296 thousand tons. This figure is so high that it can not be ignored with any concessions, and the question must be asked, in whose favor did the steel method end? Was it possible to take this opportunity cost to the pocket of the domestic consumer? The answer is definitely no. Unfortunately, with a wrong policy, the steel market deviated from its decisive profitability.
*** An overview of Iran’s steel export record
In the first 10 months of this year, the country’s average steel exports were 5 million 136 thousand tons, which shows a decrease of 12 percent compared to the same period last year. Of the steel exports, the share of billet and bloom exports in the first 10 months of the year was 99, 3 million and 927 thousand tons, and the share of slab exports was 1 million and 209 thousand tons. Slab exports fell sharply by 30 percent in the first 10 months of this year, while billet and bloom exports fell 4 percent.
*** Assess the export status of steel products
The total export of steel products in the first 10 months of the year was 99, 2 million and 373 thousand tons, which compared to the same period last year, shows a decrease of 20%. Among steel products, the share of exports of long steel sections is 1 million 798 thousand tons and the export of these sections, in the first 10 months of this year, has decreased by 21%. Exports of rebar, which has the largest share of total exports of steel products, in the first 10 months of this year compared to the same period last year, decreased by 22%. Exports of steel flat sections also decreased by 19% in the first 10 months of this year, reaching 575 thousand tons.
Exports of sponge iron in the first 10 months of this year decreased by 25% to 666 thousand tons. It is noteworthy that in the first 10 months of this year, exports of steel products, intermediate steel and sponge iron have been declining, and despite the significant growth of production and the domestic recession, we have not seen an increase in exports! Among the two important sectors, the decrease in exports of long steel sections was much greater than the decrease in exports of steel ingots.
*** Policymakers’ actions in line with the Corona crisis
The fact that Corona hit all steel markets in the world was not unexpected and all analysts had accurately calculated the contribution of this factor in reducing steel production and transactions for all markets. But unfortunately in Iran, severe internal restrictions related to the market regulation headquarters. It created exactly the same crisis that Corona brought to the international steel market. We have seen this since the middle of this year, when many analysts criticized the actions of the Market Regulation Council and warned of its dangerous consequences.
*** Steel market analysts predict a drop in exports
However, this critical situation had previously been noted by the request of steel analysts to the Samat Organization, and there were also requests from the Minister to prevent these events that we are witnessing today, which can be preceded by these cases. Triple pointed. 1) All export restrictions of iron and steel of the country should be lifted immediately; 2) Export development should be given priority as one of the main goals of the market regulation working group (at least regarding steel); And 3) like other steel-producing countries in the world, export incentives should be established and implemented quickly.
*** Currency market export reduction factor
In the current situation, export markets are likely to be accompanied by a decline in luck. In recent weeks, we have witnessed the beginning of declining shocks in the free exchange rate in the country, which was a signaling decline for many market participants and even caused the lower part of the steel chain in the hope of lowering hair prices.
Postpone your purchases of raw materials (steel ingots). With the depreciation of the exchange rate, it may be thought that the foreign side will be encouraged to buy steel from Iran, but with the rising costs of steel production in Iran, producers are reluctant to sell at low exchange rates.
*** The impact of the Chinese New Year holiday on the steel export slump
But in addition to the prospect of currency devaluation in the Iranian market, another factor that will lead to a decrease in Iran’s trade and exports in the field of steel is the issue of Chinese New Year holidays. China is the most strategic customer of Iranian steel and these days there is no news of Chinese demand in any market. Perhaps it would have been better to prepare for these days in advance, and to make up for the drop in demand these days in the booming market thirty days ago by repealing the steel trading method more quickly.
*** Optimistic about the export boom in late March
The continuation of the downward trend in the price of CIS billets with the re-entry of this rate into the upward trend depends to a large extent on the reopening of Chinese markets after the Chinese New Year holidays and the amount of Chinese domestic demand. The latest data show that the country’s demand has increased in the last week before the start of the Chinese holiday, which could mean that market participants predict a growth in domestic market demand in China after the Eid al-Adha holiday. Therefore, if there is no new event such as a new wave of Covid-19 epidemic in European countries, perhaps we can be optimistic about the growth of Iran’s steel exports in late March.
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