On Sunday, we saw a change in the trading direction of the stock exchange in a direction that has increased the financial risk of steel for investors and individuals who have decided not to empty their warehouses in this market. This can keep the financial market risk high for a long time. In the following, we will refer to this issue and the factors that moved the market in this direction. Please be with Artan Press.
*** Financial risk of steel depends on the dollar exchange rate
The main story began when the important and key resistance of the dollar was broken at the border of 24 thousand tomans. This will affect all commodity markets in the short term. National exchange office dollar sales rate based on capital market database information; Officially, the important support of the 25-24 thousand Toman channel was officially lost yesterday, and returns to this rate are considered very unlikely until further notice. This immediate decline in the dollar could plunge the steel market into a deep recession.
*** Uncertainties about the behavior of the dollar
It should be noted that changes in the price of the dollar in the open market have not yet been stabilized. It is too early to judge and we will have to wait for the future behavior of this market; Como cloud support for the dollar still dominates it. This can affect the behavior of steel traders. Increasing the financial risk of steel in the current situation is not in anyone’s interest. Because both producers and consumers are on the path of wasteful spending and the volume of trading on the commodity exchange will be greatly reduced.
*** Scenario of a sharp decline in steel prices in the open market
Of course, it was clear that the dollar would be doomed to break this 24-25 support if it wanted to stay on the downward trajectory that began at the beginning of November 1999. With this channel broken downwards, we will see a drop in stormy prices in the open market of steel products. The fact that the steel price bubble bursts in the open market is itself a large and stable financial risk of steel. The domestic bullion, for example, has now reached a critical juncture with the defeat of leading asymmetric resistances as the dollar moves one after another.
*** Financial risk assessment of steel in the field of ingots
Regarding the price of ingots and the financial risk of steel in this product, it should be noted that this product is only one step away from the historical peak of the average price of domestic ingots of 11,700 Tomans, but at the same time the potential of domestic demand has been greatly reduced these days. It remains to be seen whether the steelmakers, in spite of all the consequences of the propositions affecting this market; Will they be able to maintain this price level or will this point eventually become another point of return (pivot)? If the price of steel ingots and the dollar market diverges, it is more likely that this market will accept the investment risk more than other steel products. Sufficient time must be given to the market to determine this scenario.
*** Steel financial risk epidemic to all sections
The issue of increasing steel financial risk is not limited to the sheet sector. These days, all steel markets are inflamed by uncertainties in the market due to financial factors and are at a crossroads between supply and purchase. We have seen this clearly in the long steel market. The more the flame of prices in the domestic market of long steel sections burns more; Demand is deepening in its own defensive lock, as we saw the long-term market end in a severe recession on Sunday. This has been perhaps the most obvious financial risk for steel since the beginning of this year.
*** Incompatibility of domestic and international steel prices
But if we want to examine the root causes of the increase in the financial risk of steel, we will say that one of the reasons is the incompatibility of the time of the upward trend of world steel prices with the downward trend of the domestic exchange rate, which we mentioned in previous analyzes. Another is the increase in negative inflation expectations of public opinion. What happened this year was completely different from what happened in the market last year. Last year, if the demand for steel increased, the reason was that the inflation rate was in line with the rising trend of the dollar in line with world steel. But now the situation is completely different.
*** Financial risk of steel due to exchange rate divergence
As mentioned earlier, the divergence of the dollar and prices in the steel market has now become a challenge. Public opinion is now expecting, rightly or wrongly, for the dollar exchange rate in the opposite direction of the global steel uptrend. This issue must be taken seriously. Our markets at the moment and in this existing paradigm, do not have the potential to attract rising steel prices. Unless the market maker can inject money into the steel market at least in a cross-sectional way, adopting this will not reduce the financial risk of steel in the market. Perhaps this, in the form of a drug, will make the market a bit more sensible before the presidential election. And logically slow.
*** Rise of unbridled sheet rates
Recent evaluations of steel trades show that the 2 mm thick sheet, within the proposed prices, continues the unbridled upward trend of this market, the border of 23,500 Tomans, including VAT, along with some increases in prices from 100 to 200 Tumani is included. This irrational price increase is a financial risk of steel in the open market. In this case, the demand will wait until it is forced to buy; Or his logic will be persuaded and accept this price increase, and it is natural that accepting this time suffering means the continuation of the erosive recession towards domestic demand.
*** Financial risk of steel from a global market perspective
Evaluations and experience of global trading show that it is possible When this global growth cycle ends, it will begin to reform again. Steel and upstream news now has a consumption model for the capital market and big buyers; For the people and the domestic market otherwise. For the capital market, they expect higher prospects in the global bullion markets, but for the consumption of domestic media, as mentioned earlier, they tend not to welcome the excess domestic demand. This difference of opinion can be considered a financial risk of steel.
*** Boom in steel export markets
These days, the biggest contribution to the export field of the country’s steelmakers; In a way, the domestic market demand is seen in silence and hesitation; Because at present, the main thoughts of the domestic market players are involved in Borjam and in a way, taking patience and watching until the markets are freed from uncertainty; Political factors also play a role in steel financial risk.
*** Financial risk of steel under the shadow of the rules
Calming inflation expectations and a skeptical outlook on the severe injection of liquidity into commodity markets, including the country’s steel market, and the hope of lifting sanctions these days, as well as the numerous locks that are under various rules and restrictions on turnover monitoring systems and A tax has been created to counter speculation in the domestic market; it has increased the financial risk of steel and provided an opportunity for the country’s major steelmakers to increase their share of this upward cycle of export markets, although some of their managers are still Some export barriers are complaining.
*** Threat to steel financial risk for warehousemen
If the fountain of this global steel uptrend in the supercycle he is riding on stops, what losses will steel warehousemen suffer? This financial risk of steel will affect the entire steel chain of the country. This issue should not be underestimated. Ingot supplier who sells ingots at the moment and is out of risk.
The retailer who has fallen into the trap of excitement and regardless of the output of his warehouse and maintaining the balance of inventory, may have excess purchases. This financial risk of steel in the current situation can pave the way for the bankruptcy and closure of steel companies. This part of the supply chain actors, because they have an erosive and thorny output, usually suffer the most losses.
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