Prices in the current steel export market are booming, and in other words, it can be claimed that this year is a unique year for the export of steel resources and products due to the high volume of Chinese demand for crude steel, prices are growing in all markets. We are a commodity. But with all these optimistic interpretations of the steel market, we are witnessing a trend that could lead to a stalemate in Iran’s middle steel exports. In this analysis, we will look at this issue in more detail. Please be with Artan Press.
*** Increased risk in intermediate steel exports
The crisis we are witnessing in the Iranian steel export market originates from the Persian Gulf. The Gulf Cooperation Council is approving a directive to restrict imports of intermediate steel products and close import duties. As a result, we naturally lose some of our market share.
Intermediate steel exports in the current situation is a risky scenario for the steel market. Iran, meanwhile, has targeted a significant portion of its exports in the middle steel sector for the Persian Gulf region. The steel export market is in a very new situation than ever before. In the current situation, we are witnessing a significant increase in prices in the global steel market. China, meanwhile, has enacted laws to liberalize steel imports and restrict exports. The 13 percent VAT levied on Chinese steel exporters was abolished in early May, but in return freed up imports of intermediate steel products.
*** The reason for the increased risk of intermediate steel exports in Iran
But why should intermediate steel exports be accompanied by this threat in a booming market? All targets in the current market are aimed at controlling the price of global iron ore. Therefore, if the production and export of intermediate steel is controlled, we will see a drop in prices in the iron ore sector. These developments are politicized by the Chinese. To date, China has shown that it has been successful in implementing this strategy. In recent days, with the implementation of this approach, we have witnessed a 10% drop in world iron ore prices. It seems that this approach can reduce the price of iron ore by another 10% in the coming weeks.
*** Favorable conditions in steel export markets
In the current world steel market, most manufacturers are in a very good position to be profitable. Middle steel exports have also benefited the most from this issue. There are predictions that the price record of 2007 and early 2008 is likely to be broken again before the global crisis. The reason for this can be seen in the spread of positive views of the results of global vaccination.
This has created a wave of demand in industrial units consuming steel. At that time, the price of billet steel ingots reached about $ 1,200 and slabs about $ 1,000, but now forecasts suggest that the price of slabs could reach $ 1,200 and steel ingots could reach $ 1,000. If now, after 13 to 14 years, the price of slabs is higher than that of steel ingots (billets), it is due to the higher demand for flat climbing products, at that time the demand was higher for the long steel sections used in construction. The main issue is that Iran should not lose its growth path in a situation where global markets are at their maximum efficiency.
*** The decision of the countries of the Persian Gulf Jose for intermediate steel
Despite the decision of the Persian Gulf countries to impose tariffs on the middle steel export market, Iran must focus all its efforts on selling to Chinese consumers. China remains the world’s largest consumer of steel. Although the countries of the Persian Gulf were a good destination for sales, in the current situation, the cost of exports in the country should not be increased. With rising prices in China, it is still possible for Iran to sell its intermediate products to the Chinese at world prices.
*** Evaluation of steel market in Southeast Asian countries
Global steel markets in Southeast Asia do not matter. ASEAN member countries failed to perform well in steel production. These countries could be considered as some competitors for Iran’s middle steel exports. Vietnam is the only country in the region that has performed positively and experienced 2% economic growth in 2020. The country was able to increase production of its steel products in 2020. Iran must monitor Vietnam’s export performance and sell its prices to the Chinese market in a competitive manner compared to Vietnamese supplies.
*** Risk assessment of the Persian Gulf region in the middle steel export restrictions
At first glance, the decision of the Gulf countries to impose export restrictions on the middle steel sector may be a threat. But as long as Iran can increase its steel sales to China, it can be argued that there has been no stalemate in the Iranian steel market. In the current situation, Iran should focus on selling China’s central steel. According to the World Steel Association last week, in 2021, the supply of steel in the global market is 102 million tons less than demand. The association also predicts that by 2022 there will be a 50.6 million tonne shortage of steel supply.
*** The need for domestic steelmakers to pay attention to global reports
Iran should pay special attention to the reports of the World Association. Coronary conditions may be controlled in China and the United States, but many Asian countries are still strugglingThey struggle. Despite the corona situation in which some steelmakers such as Japan, South Korea, Germany and even India reduced production in 2020 and could not reach full production even in early 2021, we will eventually have a reduction in supply in the global market. As long as this deficit exists, the world price of steel will continue to be high in 2021 and in 2022 slightly lower than in 2021, but it will still be high. Even if Iran loses the Persian Gulf market, there is still a chance for compensation for steel exports.
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