Power outages have been a topic that has entered the industrial and social literature of the Iranian people since late last year. In the year called production barrier, we are witnessing maximum pressure on production. Unfortunately, the government has made up for its eight-year shortfall in the production of power plant phases by cutting off residential and industrial electricity. Continuation of this trend will stabilize the wave of inflation in the steel market. An issue that could make things difficult for the next government. Continuation of this trend will stabilize the prices of housing, cars and home appliances at best in these prices. It seems that we need to think about this situation. Although it seems too late today. Stay tuned to Artan Press.
*** Take a look at the severe consequences of power outages in the steel industry
The issue of power outages has worried and annoyed marketers, businesses and manufacturers, from the confusion of people and the stress of people with special illnesses in their homes. Power outages are an issue that has overshadowed all consumer groups, including residential, commercial and industrial, and has hit the indicators of people’s working and personal lives. Unfortunately, the authorities, in times when this situation could have been better managed, instead of solving the problem at the root, cleared the issue and sought to compensate for the shortage of electricity in the market by cutting off the electricity.
We are witnessing a self-imposed embargo on the steel industry, given that all the concerns of domestic producers are to take advantage of export markets. We owe this self-sanction to the policies of the Ministry of Energy. The claims made by the spokesman for the electricity industry are far from the engineering world. Certainly everyone knows that lowering the water level behind the dams is not something that is to blame in the current situation.
*** Self-sanctions in the steel industry due to unplanned power outages
Due to its successful and competitive entry into the world market, the steel industry has been able to be among the top ten steel producing countries in the world. The currency of acceptance has also been calculated in these years. If we consider this issue along with frequent and unplanned power outages of steelmakers, the first consequence will be the inability to meet the international obligations of steelmakers.
In addition to damaging the Iranian steel brand, this makes it easier for competitors to take over Iranian markets, because no buyer can endure a contract and lose the contract. From the very beginning of the power outages, we have been happy with the situation in which domestic steelmakers have struggled to meet their foreign obligations. If the issue of sanctions becomes serious and the sale of oil and steel becomes challenging in the future, we will definitely regret the mismanagement these days. The losses to the steel industry can not really be determined by numbers. The situation of the export market in the current situation is very disappointing.
*** Industrial power outage policy; A strategic mistake
It was initially thought that power outages at steel mills were a miscalculation. But as this trend continued, we saw the producers’ concerns become more serious. This trend has led all analysts to agree on the price of steel in the domestic market. Meeting the domestic needs of the country also affects. The consequences of this power outage are far greater than previously thought. Frequent and unplanned power outages lead to shortages of raw materials for downstream steel products in the market; As a result, the market faces rising prices for downstream products such as rebar, beams, studs, coils, etc., and creates economic problems that will affect all people.
*** Consequences of power outages for steels
Unfortunately, declining production levels are just one part of the power outage in the steel industry. Just as a power outage damages electrical appliances, we experience a similar situation in the electricity industry. Some electric arc furnaces face major problems with steel melt after a power outage. The core of these furnaces swings after a power outage and the entire furnace must be replaced, which costs billions. This type of incident is considered a strategic risk in industrial projects abroad, and project managers and production managers in factories consider the occurrence of such incidents as the end of the long-term profitability of the complex. Production costs will definitely go up and eventually the smoke will go to the eyes of the end consumer.
*** Rising steel prices due to industrial power outages
The steel market will enter many commodity markets if it enters the price increase phase, which has been going on for some time. Given this price of steel sheets with power outages and rising dollar prices, it is likely that the cost of cars in Iran in the next six months will be very high. This will happen in a situation where efforts are being made to balance the price of the car. However, it is likely that car prices will be under pressure in the second half of this year due to rising prices. The same can be said for the housing market.
The unfortunate issue is the decline in people’s purchasing power and the lack of support for this price increase. Unfortunately, we will see a severe recession in industrial markets. It is likely that the service sector will also suffer from losses due to power outages causing them to run into problems.
*** Analysis of domestic stock exchange performance in the shadow of power outages
With all the shortcomings and challenges in the market, it is not bad to have a look at the performance of steel companies in recent days. In this regard, and based on the announcement of the supply of the Commodity Exchange, 5,000 tons of various colored and tin-plated Mobarakeh sheets will be offered in the Industrial Hall on the previous day. This is the first supply of sheets Mobarakeh Steel is after the power outages and the forced closure of the steel industry. The reduction in supply volumes is likely to be a reaction by steelmakers to recent power outages.
*** Steel sheet market affected by power outages
The sheet market has been hit hardest by power outages. The first consequences of the cessation of production of steel companies due to lack of electricity in yesterday’s supply of steel sheets are evident. For this reason, we saw a drop in the supply of this product in the market yesterday. The base price for colored sheets is 291 thousand Rials, which is 3.1% less than the base price of its previous supply. The supply volume of colored sheets has decreased by 71% compared to the previous supply. Colored Mobarakeh steel sheet is offered with a base price of 29,100 Tomans per kilo, which shows a 3.3% reduction in price compared to the previous offers of this company.
*** Discovering opportunities from the heart of power outages for steelmakers
Due to the attractiveness of export markets, steelmakers sought to reduce supply in the domestic market. Now it seems that the power outage has created this excuse for them. For the time being, the power outage became an excuse and provided the conditions for the steel market to face a price jump, which, of course, regardless of the restrictions imposed on production; It is pleasant for steelmakers.
It is worth considering this point; Those days when all the pillars of the market were favorable for the supply side of steel in the domestic market; The supply side did its best to engineer supply supply in the commodity exchange, so that the demand side or the rolling field almost always complained about the lack of ingots. Now this is an unexpected power outage; It will become the best reason and excuse for the steelmakers to be able to bargain in reducing the volume of stock exchanges, and it will certainly be hard work to regulate our country’s steel market; Now this issue will be presented for some engineering excuses.
*** Power outage and increase in the supply of sponge iron
Another issue that can be traced back to the power outage is the significant increase in the supply of sponge iron in recent days in the commodity exchange. Evaluation of commodity exchange data shows a decrease in the volume of ingot production in these days of low electricity and the move from the sale of ingots to the sale of raw materials and the main materials required for the production of ingots; That is, it has the same sponge iron. But it is not bad to investigate the reason for this a little. In Iran, the process of producing sponge iron in proportion to ingots; It is far less dependent on electricity and therefore with reduced ingot production; Large self-consuming manufacturers of sponge iron have been pursuing it with great intensity and are now turning to selling sponge iron.
Due to its nature, sponge iron is less durable and should be used in a short and specific period of time. Therefore, since the consumption of sponge iron is well established in the country, they will quickly offer this product on the stock exchange and export it if there is no customer for it. So the power outage will be compensated by the steelmakers through the export of sponge iron, the analysis of its advantages and disadvantages requires a comprehensive analysis
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