Critique of regulatory pricing losses in the steel market - آرتان پرس | مرجع رسمی اطلاع رسانی فولاد | آرتان پرس | مرجع رسمی اطلاع رسانی فولاد

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Critique of regulatory pricing losses in the steel market

شناسه : 40891 ۳۰ بهمن ۱۳۹۹ - ۱۳:۴۱
The Iranian steel market is expected to go through inflammatory days due to errors in its pricing methods in recent months. It is likely that if no decision is made on this issue, the erosion trend of steel prices will occur after reaching peak prices in all steel products and steel markets will experience a significant recession by the end of next spring.

Iran’s steel market has gone through very turbulent days this year, which no analyst deeply believes that despite all these challenges, the wheel of this industry still has the power to spin. Unfortunately, in the midst of economic sanctions and the lack of modern technologies and other challenges in supplying the materials needed in the steel industry, unfortunately, the issue of mandatory pricing is still a disaster for steel and different pricing methods have taken motivation from buyers and sellers. In the current market, despite the significant rise in prices, both the seller and the buyer admit that they have suffered this year. Please stay with Artan Press until the end.


*** Nonlinear behaviors in steel trades

In the current situation, despite the elimination of steel pricing practices, we are still witnessing inflammation in the market, we are witnessing non-linear behaviors in transactions in all steel fields. Unfortunately, despite the severe recession in the market, we always see the growth of Milger prices and other sections, and this issue has arisen due to exchange rate fluctuations and the abolition of the steel method. In the meantime, only those who have no representatives are the final consumers, while the decisions of the government should ultimately be made with the interests of this circle in mind.


*** Failure to implement the policy in the public interest

Given the negligence of steel policymakers at the macro level in the public interest, it is imperative that from three perspectives: property rights, consumer rights, and public rights, we codify the policy in order to achieve perhaps some of the transparency that the market needs. Reach the final consumer.

Although there may not be a direct or apparent link between the ownership entity and the policy-making subject of this report, the rights that arise around a change in the ownership and assets of steel market players during an exchange can be identified. Meet their needs at fair prices.


*** Strategic mistake in dollar pricing of steel

In the segmented economy of Iran, where the foreign trade sector is small compared to the whole economy, and in a situation where the foreign trade and the country’s foreign exchange system are exposed to political excitement and fluctuations, linking the pricing of steel chain products with exchange rates (Article 1: Basic pricing of steel products) pumps all the turmoil in the exchange rate and the global economy to the steel industry.


*** The pressure of export markets on domestic steel prices

Apparently rapid increase in export prices of steel products including ribbed rebar in the region; In particular, the increase in Sharpe prices in the CIS and Turkish export markets; Has led to renewed demand from the consumer market of some of Iran’s neighbors, especially Iraq; To buy the final product, especially “ribbed rebar” should be turned to Iran, as we saw clearly in the days. Unfortunately, this situation can enter the domestic market into a vicious cycle, because the domestic price can not be determined based on the export rate in the short run.


*** Damage to the instability of the dollar in steel pricing

Due to the fact that the dollar exchange rate in the country is not stable, we can not base steel pricing in Iran on this unstable factor. This is the cause of heavy fluctuations in the domestic steel market. At the same time, the combination of exchange rates and pricing of steel products that should show in the currency for their economy.

By selling raw materials and not returning the export currency in time and finally using the steel export currency for other more rentier industries such as assembled cars and home appliances (Article 16), it will intensify inefficiency. It may also not be appropriate for the domestic consumer to pay for the political games affecting the dollar exchange rate or the growth of commodities in the world market to the steel rental producer or the surrounding brokerage network.


*** Suppression of mineral prices in favor of steel

Under Iranian law, mines are part of Anfal and are owned by the government to supply public goods. The exercise of state ownership is obtained by receiving the ownership right from the exploitation of the mines. Regarding iron ore mines and the amount of iron ore extraction (about twice as much as the annual supply of steel), very small amounts are received, which are transferred to the steelmaking and rolling sectors by suppressing the price in the mining sections of the steel chain and to the producers. Special placed.


*** Pressure on the final consumer of steel

Steel pricing formula with preferential prices of gas (2600 Rials per cubic meter (about one-seventh) and electricity with a price less than 10% of the world price and labor with less than 10% of the global soft industry and mineral inputs with Pricing half to one-third of world prices (the price of sponge iron is about $ 130 compared to the world price of $ 250-300), how rationally does it want to align itself with world prices in the last segments? Will be paid from the pocket of the final consumer who has left the field of beneficiaries.


*** Conflict of interests between the Ministry of Silence and steel brokers

The Ministry of Silence intends to reduce the price of steel, but this has not been to the liking of some, and the same clashes between the Ministry of Silence and the Commodity Exchange have caused traders to take over the pricing of steel. In recent weeks, price inflammations in the iron and steel market have occurred in various ways. In some days, with the decrease in the price of the dollar, the price of iron in the market is constant and, unfortunately, with the increase in currency prices, the market has seen increases in rebar and iron. .


*** Price inflammation in the iron market in parallel with steel

Unfortunately, dollar-based daily pricing has hurt other commodity markets as well. This is what has caused the iron sellers They complain about the situation and call for an integrated system in the pricing of steel and iron products. According to iron sellers, prices in the market have no criteria and this issue has left them in uncertainty. It is not clear on what argument prices will rise or fall. This affects transactions and there is a severe recession in the market.


*** The blow of steel order pricing to the commodity exchange

Earlier, capital demand in the commodity exchange was affected by a significant price difference between the domestic market and export rates, despite the relatively severe recession in the real domestic consumer market; Seen in the last three weeks; Next, however, the incentive for capital demand to bring commodity exchange rates closer to export rates will be significantly reduced, and so for a while we will see a recession in all pillars of the domestic steel market, which is a special advantage for large steelmakers and the government. With their greater focus on export areas; In contrast, there are steelmakers and smaller private sector rollers whose products do not have a strong presence in export markets and their share of this market is small; They will suffer from relatively severe damage from the recession in the domestic market.

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