Iran’s steel export market went through inflammatory days last month. As the price of iron ore in the world market recorded a new historical recession, we saw an increase in prices in all steel-dependent industrial markets. This issue in the Iranian market has also paved the way for the growth of prices and the beginning of the process of alignment of domestic prices with the international market. In the following, we will review the situation of steel export markets in the past one month. Please be with Artan Press.
*** Start of increasing prices from Iran’s steel export market
As we had previously predicted, 1400 should be considered the year of inflation. From global items to the economy to the budget of 1400, everything shows the growth of prices in the domestic and even global market. Consumerism in the current situation has become the most important factor in the growth of steel prices in the world. This growth has also included the various products of the steel chain, so that the price of steel ingots traded in the country’s commodity exchange this week has increased by 172 percent compared to the beginning of last year.
To bullshit this last month’s price increase, iron ore is to be blamed for being too expensive. This caused other steel commodity markets to experience sharp price growth last month. In this regard, the price of each kilogram of steel rebar traded increased by 152 percent and the price of each kilogram of rebar in the open market increased by 135 percent during this period.
*** Strategic mistake in orderly pricing of domestic steel market
Price growth in the steel market has once again given the wrong green light to the country’s policymakers. Last month, the growth of domestic market prices in line with export markets has prompted parliament to consider a solution. Some members of the Islamic Consultative Assembly have reconsidered identifying expensive factors in the market and are trying to regain control of the market by putting pressure on Minister Samat. Syntactic control of steel prices is a threadbare approach to pricing policy. This solution will have serious consequences in the short and medium term. As in the domestic market, we have witnessed the sticking of prices in the field of steel to the price ceiling.
*** Record of Iranian steel export market in terms of exchange rate
But the price growth we saw last month in Iran’s steel export markets is not limited to global markets. Other effective factors in the growth of export prices should also be considered. One of the most important factors creating the current situation is the dollar exchange rate and its increase over the past 24 months.
From the beginning of last year until today, the exchange rate has grown by 48% and the free exchange rate has increased by about 35%. At the same time, in this period, ie from April of last year until today, the price of CIS steel ingots has increased by 82% and Iran’s export steel ingots have grown by 70%. The approach of supply prices to export sales prices is one of the things that has led more producers to comply with the supply floor.
*** Ingots play a key role in the growth of steel export market
Since the performance of Iran’s steel export markets strongly depends on the price of steel ingots, it is necessary to pay attention to the trading details of this product. Ingots last month after hitting the historical rate ceiling twice around 11,750 and 11,700 Tomans; And pullback in the range of 11,350 and 11,300 Tomans; Finally, for the third time and with strength, he broke this historical resistance.
After breaking this range, leaving behind this resistance, it has even crossed the border of 12,000 Tomans today and has now touched the figure of 12,040 Tomans; The average price that this market had never seen before. The reason for the increase in the price of ingots should be considered in the shortage of Iranian iron ore reserves. This issue as a threat has covered the entire steel supply chain of the country. We have to think about it, otherwise Iran will not have any signs of steel production in the next thirty years.
*** Price jumps in steel chain raw materials
Changes and developments in the steel export market in May can be fully justified and examined. Apart from discussing the record low steel prices in export markets; Which has not been recorded since 2008 and even compared to the dollar has decreased by half around 20700 Tomans, it still justifies domestic rates. The issue of boiling and rising prices of raw materials in the upper layers of the supply chain of this strategic commodity in the country, such as scrap iron; Concentrate, pellets and sponge iron; They are also among the most important issues. These factors played a role last month as a powerful lever to push the price of the final product in the country’s steel market.
*** The role of global interactions in the steel export market
The outlook for prices in steel export markets must also be examined in terms of global interactions. In the past, with the publication of news about the Chinese approach after the non-payment of export tax awards in this country, a golden opportunity has been given to Turkish rollers. This could generate a profit of $ 230 to $ 260 per ton for them. Iran must also increase its exports to China. As reflected in Mr. Jafari Tehrani’s remarks, Iran should focus on China’s export markets in the current context.
The difference between the price of the billet and the final product, along with the exit of the Chinese from the export market, has led to new markets, especially in East Asia, dominated by the Turks, in addition to high profits. Having a variety of products as well as all global standards such as Karz, Tau and Afkap, regional and even national in the target markets has been able to take advantage of golden opportunities for them. Iran should also be in this game Make a good role for yourself.
*** Trade war A unique opportunity for Iran’s steel export market
Iran must always monitor the state of the Sino-US trade war. This analysis can outline the growth prospects of Iran’s steel exports. At present, China and the United States are at war with each other over scarce commodity markets, and this issue has reached the bottleneck of iron ore and steel ingots. This competition will definitely push up global steel prices. Therefore, this price increase has become a threat to Beijing’s economic recovery programs. The cost of all the goods needed to boost infrastructure after the corona, from steel and coal to glass and cement, is rising. The price of rebar recently reached 6,200 yuan ($ 965) per tonne in Shanghai, a new 40 percent increase. Certainly China will do its best to reduce world steel prices. Iran must make good use of this opportunity.
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