On Monday trading day, we saw a significant change in the pricing of the base rate of ingots in the commodity exchange. Therefore, in the market, we saw a dipole in consumer behavior, which was due to the change in the rate of ingots. With the whispers of the announcement of the base price of supply this week, the bloom ingots of some steelmakers can be heard. The market immediately reacted positively to demand and we saw movements in the steel market.
The increase in the price of steel ingots in the Iranian Commodity Exchange by three percent in just one trading day has caused the market situation to deviate from its logical path. Continuation of this trend will have a strong negative impact on the domestic market and the final consumer satisfaction of steel. In the current situation, we are witnessing the return of world steel prices. But in the domestic market, this game does not seem to have an end. Please be with Artan Press.
*** Margins of changing the base rate of ingots in the commodity exchange
The news related to the change in the base rate of steel ingots started from here that some steelmakers have announced the base rate of supply of this product along with +3% increase compared to the average trading rate of last week. This issue has caused mobility and some inflammations in some points of sale of ribbed rebar. Apparently, the pressure to increase the base rate of stock exchange ingots continues to increase the domestic market price بازار. Continuation of this trend will cause domestic prices to be closer to world prices. But the question arises whether after the return of prices in the world market, the Iranian steel market will also experience a drop in prices? Or the phenomenon of price sticking to the ceiling will be the main issue of the market.
*** Price growth signals from the ingot base rate channel
Signal of a 3% increase in the base rate of supply of Bloom ingots in the commodity exchange; That is, the signal of a price increase of about 370 to 400 Tomans to the domestic market in all sections and products. However, over the past week, the average price of ribbed rebar in the domestic market, with some slight fluctuations, has been almost constant during this period. Also during this period; The market of induction ingots outside the commodity exchange has not only not increased, but has also decreased by about 200 tomans per kilogram.
So that the last time yesterday, an average of about 13,000 Tomans including VAT and about 11,925 Tomans without VAT has been priced. It seems that rent ingots will definitely not keep the distribution of prices in the steel chain uniform. It remains to be seen which sectors will use this issue as a pretext for exponentially rising prices.
*** Changing consumer behavior in the steel exchange yesterday
In general, the induction ingot market was divided into two parts yesterday before determining the base rate of ingot supply in the commodity exchange and after. Before determining the base rate; We witnessed the market of calm ingots and the proposed figure was more around 13,000 Tomans, including VAT. But after determining the base exchange rate; The market became a little inflamed and some higher offers were made even up to figures around 13,500 Tomans, including VAT. But in the end, this inflammation subsided and at the end of the transactions in this area, around 13,200-13,100 Tomans were traded, including VAT.
*** Evaluation of transactions made in the commodity exchange
According to the information of the online trading board of the Commodity Exchange, 73 thousand 768 tons of various types of rebar baskets were offered yesterday, which has faced a registered demand of 98 thousand 606 tons. Finally, 40,541 tons of these rebars have been traded. The average price offered by buyers reached 129,826 rials. This figure shows 0.9% of the competition. Also, 25,734 tons of various types of beam baskets were offered yesterday, for which the registered order has reached 61,491 tons.
The volume of all types of beams traded reached 19,343 tons. The proposed rate for beams was 135,545 rials. This figure shows 0.6% of the competition compared to yesterday’s base average. Also, 48 tons of corners were traded at the proposed rate of 134,114 Rials, but the studs were not finished. The supply of 2,000 tons of Sepehr Shargh Bloom ingots also met with a demand of 8,000 tons and was traded at a bid price of 124,549 rials, which indicates a 2.6% competition among its buyers.
*** Signals of growth of the base rate of ingots to the steel market
Now it seems with the first signals emitted from some information of steelmakers; Apparently, some of them are supposed to make ingots more than 13,700 tomans per kilogram, including VAT, or about 125,979 rials, without considering taxes; Offer on the commodity exchange. A thumb account shows that an increase of about 370 to 400 tomans compared to last week’s trading rate or about 470 to 500 tomans compared to last week’s base rate can deepen the recession in the market for a long time. It is worth mentioning that export markets for some time They have calmed down and even made some withdrawals due to China’s control policies. Meanwhile, the domestic market of Iran has no plans to straw prices.
*** Continuation of pricing process based on export factors
The latest CIS bullion export rate was observed at around $ 690 / tonne FOB before the end of the weekend. Demand will include. Currently as the first feedback; Some rollers and sales outlets have announced the sale price of rebar along with 100 to 200 Tomans / kg price increase compared to the priority of yesterday’s trading hours. They have also been successful in sales. Because the market has reacted positively to changes in the base rate of ingots. The difference is about 700 tomans per kilogram The market and stock exchange rates for bullion are not small, and unfortunately, we still see that the issue of basic pricing is left to the steelmakers themselves, and they do not have the slightest mercy for the domestic market.
*** Inflammations of the steel market under the pretext of increasing the base rate of steel ingots
The increase of 400 to 700 Tomans in the bullion rate compared to the previous exchange rate and yesterday’s market rate is the last observation of the change in the base rate of steel ingots. In a situation where the price of ingots in the domestic market has gone up to the border of 86% equivalent to the export rate, and on the other hand, we are witnessing a stagnation and complete silence in the domestic market. Such an action is not very appropriate for a free and transparent market.
*** Weak management in rent distribution in the ingot sector
It should be said to the market maker that for any reason and any kind, if you are worried about creating rents in different areas of the market in connecting it to export markets; You can or could offer your product in the export ring of the commodity exchange. This issue has also affected the transparency of the stock market. But this kind of supply and price increase in the current situation has not taken on the color and smell of trading logic. This situation occurred while China pulled the brakes on rising prices in the raw materials sector and we will soon see a drop in world prices. But certainly the Iranian market will not give up this desire to increase prices so soon.
*** Impulses to increase the base rate of ingots in commodity exchange performance
Due to the approximate completion of yesterday’s price classification table, the market was traded due to the change in the base rate of ribbed rebar steel ingots in the price range of about 14,100 to around 14,700 Tomans / kg, including value added tax. The average rate of this market yesterday was estimated at 14,270 Tomans, which has been accompanied by an average and approximate increase of about 70 Tomans compared to the previous day. Continuation of this trend can paralyze the construction industry in Iran. In the current situation, construction is not economically justified at all.
*** Rising prices of long steel sections under the pretext of changing the price of ingots
Long steel market yesterday before the base rate of stock supply is determined; It was calm and relatively stable. But at the same time as the increase of + 3% base rate of ingots was determined; The market became a little inflamed and hesitant. But in the end, most of the market participants after a temporary shock of about an hour; They returned to their activities with a slight increase in price (about 50 to 100 Tomans). This price increase in the long steel sector can also be a major threat to industrial, dam and road construction companies. It remains to be seen when the market maker will stop making irrational bargains in the market.
*** Convergence of 90% of the base price of domestic and international steel ingots
Today, the steelmakers decided to increase the price of ingots by 3%, given that the last selling rate of the Commodity Exchange stood at approximately 85% of the CIS rate; And their efforts to achieve a coefficient of nearly 90%; It has not been a very interesting and worthy move in response to the end consumer’s trust in the commodity exchange. The supply and sales system has also been associated with many challenges. This is an undeniable challenge. It is predicted that tomorrow we will most likely face a not-so-interesting reception of demand in all commodity markets on the stock exchange, which may have been the demand of steelmakers.
*** Conclusion
The increase in the base price of steel ingots has become an excuse to increase prices in all categories of steel commodities in the commodity exchange. This trend is in the context that the countries of the region have shown a green light to the decline in steel prices. Steelmakers want more price increases. This will deepen the recession in the steel market.
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