Yesterday, we saw a slight decline in steel prices in the domestic and international markets, each of which originated from a separate issue. It seems that in Iran, with the determination of the election situation and the pulses received from the consumer, we will see a temporary drop in prices. At least in the Iranian market, this gentle slope of price decline will not be stable. In the following, we will evaluate this price trend. Please be with Artan Press.
*** The decline in world steel prices is due to China’s behavior
We start with the issue of falling steel prices in international markets. One of the most important factors in the decline in steel prices on world steel exchanges should be focused on the policy role of the Chinese government. China has recently posed serious threats to high iron ore prices. These threats went so far that the news of the closure of some of the outlets of this article was reflected in international publications. The margins of this issue caused the price of iron ore to decrease by about 7% in yesterday’s trading and long sections of steel in parallel with this price drop in the iron ore market by 4%. Usually in this season of the year, the inventories of producers and consumers are affected by environmental risks. But in the current situation, this issue is not an important factor in controlling steel prices.
*** Reducing steel prices out of the market norm
The custom of international markets in the current situation has been a drop of about 50% in the inventory of producers. Because construction reaches its peak in the summer. But in the current situation, this stock is in a stabilized state. This issue has reduced the inflammation of the steel market and has led to a drop in steel prices with a slight slope, at least in the Chinese domestic stock market. With the stabilization of prices in the Chinese Common Stock Exchange on the one hand and the control of prices in the Chinese market in an orderly manner, we have witnessed a slight stabilization and decline in steel export prices in this country. For example, China’s domestic billet index fell to 4,850 yuan / tonne ($ 799 / tonne) and the export index fell $ 8.
*** Steel prices fall due to iron ore prices
The Chinese government is currently focusing on controlling iron ore prices. If the price of iron ore is controlled, many of China’s dictatorial pricing policies in the domestic market will be successfully implemented and stabilized under the influence of this issue. In addition to orderly pricing in the domestic market, China has turned the economic steel wheel at a slower pace by imposing customs duties on steel exports. The reason for this is the country’s urgent need for steel to advance its infrastructure goals. In order to be the world’s largest economy by 2025, China needs to improve its customs, maritime and air infrastructure to increase the level of trade and commerce. For this reason, it prefers to have lower production costs for the government. This is the reason for the drop in steel prices in recent days.
*** US economic performance and falling global steel prices
Another important factor that is currently seen as an important factor in the decline in steel prices is US economic performance. The US government is not sitting idly by and is trying to maintain its position. In recent days, news about the US review of the sanctions on China in the economic news has gone viral. This suggests that China and the United States may also have economic tensions in the Biden administration. The stronger dollar is affected by possible US moves to raise interest rates, a factor that has maximized market risk for investors.
Therefore, in the current situation, we are witnessing a decline in trading volume and, consequently, a decline in steel prices in global markets. Another important point that is injected into the steel market from the US performance is that by raising interest rates and strengthening the dollar, production costs in the steel industry will increase. This cannot be a good thing for the global steel saturation market in the current situation. This is likely to cause a severe recession in the cold seasons of the year. It remains to be seen to what extent the countries of the Southern Hemisphere will benefit from this opportunity in the second half of the year.
*** Gentle decline in steel prices in the domestic market
In the domestic steel market, as in the world market, we saw a slight decline in steel prices. The reason for this is slightly different from global factors. Iran’s steel market has become highly dollarized and has adapted to the inflammation and fluctuations of its dollar. On the other hand, due to the end of the elections and the reduction of some cross-sectional inflation expectations in the society, we saw that the producers offered their products for sale at lower prices. In general, the market did not have a clear policy. For example, some rebar factories increased their prices by 50 to 100 tomans compared to the previous day, and others reduced their prices by 50 to 100 tomans. Yesterday we saw a decrease in the price of 20,000 Tomans per kilogram of beams. This decrease in prices was also evident in the pipe and profile market yesterday.
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