the differences between minerals and steels have peaked and in some cases, it is rumored that the strategy of not changing the price coefficients of the steel chain due to pressures from steelmakers and creating an unreliable and unprofessional atmosphere based on the impact of price coefficients on product prices. The final steel is adopted.
For several months now, the issue of changing the price coefficients of iron ore, concentrate, pellets and sponge iron has been raised and has had many ramifications.
The story goes from the insistence of the producers in the upstream circles of the steel chain to the denial of the producers of ingots. Despite holding several meetings, the two groups did not reach a consensus and no agreement was reached between the steel and mining companies. Finally, the Ministry of Industry, Mines and Trade did not announce the results of the meetings.
Until last week, news was published that the change in the price coefficients of the steel chain was not on the agenda of the Ministry of Industry, Mines and Trade. The news is still difficult to verify and has not been confirmed or denied by any official source.
But the wave of rumors continues. On the one hand, upstream activists believe that no official has confirmed the news so far, and that their negotiations indicate a definite change in price coefficients. In addition, they emphasize that these coefficients will be announced in the next one or two weeks, and the results of the meetings are so advanced that even the new coefficients are supposed to be different depending on the scale of the units.
At the same time, the Steelers emphasize that this process of change has undoubtedly been off the agenda, so much so that on Sunday, August 4, news of a meeting between the Steelers and the Vice President was published, in which it was stated that the meeting was scheduled to change pricing coefficients. Do not create steel chains.
*** The policy of pressure continues
Now, in the current situation, the differences between minerals and steels have peaked and in some cases, it is rumored that the strategy of not changing the price coefficients of the steel chain due to pressures from steelmakers and creating an unreliable and unprofessional atmosphere based on the impact of price coefficients on product prices. The final steel is adopted.
It seems that the threat has put an end to these controversies. The issue in question has also been considered in the letter of Mohammad Reza Poorabrahimi, the head of the Economic Commission of the Islamic Consultative Assembly, which was published last week.
In his letter to the President, Poorabrahimi stated: “Currently, pricing in the iron ore to steel chain is in a very complicated situation. As you can see, at the moment, the price of iron ore, equivalent to 50% of the FOB Persian Gulf price, is offered to the steel production chain.” Despite the very low cost of energy and manpower in this chain, the price of steel products in the country is sold to the people at least 10% higher than the world price (FOB Gulf price).
Certainly, this unhealthy trend in the non-transparent and inefficient pricing chain should be on the government’s agenda as the first priority of steel price reform. However, the departure of the change in price coefficients in the steel chain from the implementation process, there are also agreeers. These proponents, who are often activists in the country’s steel industry, believe that the previous coefficients were set by expert work, so there is currently no need to change them.
*** Mining in steel girders
In addition, the realization of the price of steel and the determination of its rate in the interaction between supply and demand, also provides the basis for the satisfaction of producers in the upstream circles. Now Samat has talked to the activists of this chain to check the accuracy of this issue and its effects.
Mehrdad Akbarian, President of the Iranian Iron Ore Association, said about the accuracy of the news that the price coefficients of the steel chain were removed from the agenda of the Ministry of Industry, Mines and Trade: “We have only heard this news and we do not have reliable information about its value.” However, it is hoped that this will be temporary, if true.
He added: “Today, the most important concern of producers and activists of the steel chain is to maintain the existing conditions and try to supply raw materials and raw materials for the country’s steel industry.” These raw materials are supplied by the mining sector and related industries, ie producers of concentrate and pellets.
But the pricing of these raw materials faces major problems. At present, the sales rates of these raw materials in the domestic market and the international market are significantly different. So much so that in some cases some of these raw materials are even sold at a price equivalent to 50% of global prices in the domestic market.
*** The price of ingots is equal to world prices
Akbarian emphasized: the iron ore industry activists, as the first producer in the steel chain, sell their products in Rials and approximately at half the world price to the domestic industries of the country. Meanwhile, in the middle of this chain, ie the production of ingots, the situation is different and we see that the producers of ingots sell their product almost equal to the world prices in the domestic market.
In some cases, market conditions are such that ingots are traded even higher than world prices in the domestic market. “These manufacturers can export their products to global markets and make a good profit, so they are expected to support operations in the upper echelons of the steel chain,” he said.
Undoubtedly, this support will pave the way for the further prosperity of their activities. The President of the Iranian Iron Ore Association added: “Accordingly, we have proposed two proposals to address production challenges in the mining sector, so that if they are implemented, the pricing process and basis in this chain will change so that our products are based on 80% of international market prices.” Domestically sold.
*** Rights and entitlements of mineral units
This is the right of a mining unit that, as a unit that has received a license to operate, pays government salaries, insurance, taxes, etc., has the opportunity to sell its product at a real price.
He stressed: At present, the pricing process In the steel chain, it is such that both upstream manufacturers and downstream industry activists who buy ingots are dissatisfied. It is as if only the ingot producers have favorable conditions and make a significant profit from it. However, they always expect to get cheaper iron ore.
Akbarian stated: “More important than removing the pricing of steel products from the government’s agenda is to create conditions for the continuation of the chain’s activities.” If it is important for policymakers to continue to operate in this chain, they should consider equitable distribution of profits in this chain; In other words, the conditions must be such that the producers of raw materials do not sell their products much lower than world prices.
He said: “Unfortunately, during the discussion of changing the price coefficients, steel industry activists have repeatedly emphasized that this change leads to the growth of the price of final products and the loss of the final consumer.” It is as if with the same excuse they were able to provide the ground for stopping that plan.
This excuse comes at a time when end-to-end steel products are now being offered to the final consumer, even at prices higher than world prices and at unacceptable prices. Therefore, it must be admitted that this idea is very wrong.
*** Iron ore is half the world price
At present, despite the fact that iron ore is sold 50% lower than world prices, rebar is available to consumers at a price of more than 12,000 Tomans. While this product should be in the price range of 6 thousand to 7 thousand tomans. The difference is so high that there is no justification and it can not be considered dependent on price coefficients in this chain.
Akbarian concluded: “If the government has made such a decision, it will soon realize that this action is neither in the interest of the final consumer nor in the interest of producers in the upstream circles;” So it will soon change course and start trying to reorganize the chain.
It is worth mentioning that the producers in the upstream circles are still present on the scene and want to convince the government to change the pricing coefficients by holding sympathy meetings and expert work.
*** End of Martin Pricing
Mohammad Keshani, a member of the board of directors of the Iranian Steel Producers Association, while confirming the news that the pricing process in the steel chain is out of the working process of the Ministry of Industry, Mines and Trade, said: “These price coefficients have been set by expert committees, so there is a reason to change.” It does not exist.
He stressed: “Currently, the price of raw materials for the production of steel ingots is determined based on a coefficient of the price of steel ingots, as a result, it is affected by global prices, and this trend has provided the ground for the benefit of all actors in this chain.”
A member of the board of directors of the Steel Producers Association noted: “Despite setting coefficients in expert meetings, last year and during the former Deputy Minister of Mines and Mining Industries, we saw changes in their process.” This growth was met with opposition from steelmakers, but we eventually accepted the trend.
He added that if the price of iron ore, concentrate, pellets and sponge iron is set equal to a percentage of the price of steel ingots and the selling rate of ingots is set in the open market and in the interaction between supply and demand, it is natural that with rising steel prices, prices in all This will be an ascending chain. This means that all actors in this chain enjoy the same conditions and the same profit.
In addition, when steel is priced at a global rate and the sales rates of other inputs are a factor of the price of steel, it is natural to admit that all products in this chain are priced at a global rate.
*** Price changes in the steel chain
“This claim is completely wrong,” the board member of the Steel Producers Association said in response to allegations that steelmakers had threatened to end the change by threatening to make steel products more expensive. The Association of Steel Producers and industry activists only advised the government and informed policymakers of the consequences of increasing price coefficients in the steel chain, as price changes in the chain would affect the price of final products.
He added: “Manufacturers of steel production inputs in the upstream links of this chain should note that it is natural that the selling price of steel at home is much lower than their selling rate in the export market, because to sell in the international market there are many costs such as transportation rates to producers.” Is imposed; Therefore, it is natural for them to sell their product cheaper in the domestic market.
*** the non-change of coefficients will reduce investment in mining
In the end, Keshani said in response to the rumor that the non-change of price coefficients will lead to a decline in investment in the early stages of the steel chain: “This claim is completely wrong and the non-change of coefficients will reduce investment in mining and iron ore processing and ultimately heterogeneity It does not have a chain.
Most of the protesters in the pricing process belong to the private sector and own small mines and industries. These people have only 3 to 5% of production in this chain. In fact, 95% of steel production inputs are provided by large companies such as Golgohar, Chadormelo, etc., which are somehow affiliated with the government. These units are also in line with the objectives of the country’s vision vision document on the horizon of 1404, and have made a good profit over the past years.
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