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    Steel demand was zero

    شناسه : 51247 28 تیر 1400 - 12:30
    In recent days, we have witnessed a doubling of steel supplies in a situation where demand in the steel market has approached zero. Except for a few large state-owned companies, there is no news of order registration in the commodity exchange. The free steel market is also experiencing a worse situation. The deep recession in construction is the main cause of this crisis in the steel industry.
    Steel demand was zero

    The steel market is going through strange days. Supplies remain strong. But demand in the domestic steel market is almost zero. This hair is not limited to the steel market. The housing market, the car market, and to some extent the Tehran Stock Exchange also follow this issue. This is the result of burning heavy liquidity in the stock market and emptying people’s pockets for transactions in all dimensions. The Iranian economic market must be revived with the help of contractionary methods. Otherwise, we will see a severe and unimaginable recession in all markets for goods and services. In the following, we will explain this issue. Please be with Artan Press.

    *** Zero demand for steel in the commodity exchange

    Let’s return to the steel market and transactions without results in this area. Tehran Stock Exchange is just a scene of dull and hopeless offers of domestic producers. Along with supply, however, there is a vacancy in demand. We have already mentioned that the continuation of wrong decisions made in the structure of the commodity exchange will lead the market to zero demand. These days, with the exception of a few government buyers in the beams, ingots and rebar sector, there is no news of order registration in the commodity exchange. As a result, the situation in the free market is very bad. Markets are almost half closed. Many factors have worked together to pull the market together.

    *** Why did the steel exchange reach zero demand?

    Supply in the country is twice the real demand, demand is almost non-existent and can be said to be zero. The reason is that construction is not done either. The construction market is a full-fledged mirror of a country’s industrial economy. When the construction market is not dynamic, what can be expected from other commodity markets? In this situation, how can the promises of housing construction that have been made recently be realized? The new government will certainly face one of the biggest challenges of recent years. The problem of the steel market is unnecessary transactions, dictatorial prices, manipulation of the dollar exchange rate at this time and the political issues that govern the country. If everyone leaves the market alone, the situation will improve and prices will return, that is, if the market is not waved, the market will return to the previous state.

    *** Rumors in the shadow of zero steel demand

    We are in a situation where rumors are heard even in the zero demand of the steel market. The situation is that the market no longer has the traction to bear the new rates. People have bought and stored goods; They want to use their warehouses and sell more expensively. The wave of expensive news is created by those who have goods in stock. These people did not think of the market this way. The patience of this group has also ended because many of them have accumulated all their belongings in the warehouses.

    They should also think about disrupting the order of the market and catching fish from muddy water. If this issue is not addressed, the market will calm down so much that all these hoarders will suffer, the goods will become cheaper and they will be so damaged that they can no longer recover. Market participants and consumers need to rid the steel market of speculators once and for all, and there seems to be an opportunity to achieve this.

    *** Impact of global steel price fluctuations on the domestic market

    Another issue that has derailed prices in the domestic market is the issue of global exchange rate fluctuations. Unfortunately, any downward or upward fluctuation in the global market in Iran takes the ascent. The normal state is the return of prices in fluctuations. But the culture of buyers and sellers in Iran has been moving towards price stickiness for some time. Buyers and traders need to be a little more vigilant at this time. These shocks should not be appreciated, the news of these shocks is made by those who want prices to rise. Of course, there has been an increase in price, but this price will definitely return to the previous state and become cheaper. The market has no clear path to further price increases. If there is any talk of price growth, it is only from traders and speculators who are looking for an opportunity to be locked in this locked market.

    *** Government inaction and reaching the zero demand point for steel

    We have said before that the government is not interested in reform in the last days of its presidency. In many markets, this has led to the economic and livelihood situation of the society moving in this direction. Unfortunately, these days, the Iranian steel market is the result of passivity in the policy-making sector. All the factors that can lead to the growth of steel prices in the domestic market have come together in today’s market conditions and have disrupted the market order with maximum power. Unfortunately, regulators no longer have the incentive to continue. It seems that the government is no longer eager to control the factors affecting the steel market.

    This has deepened the recession in the steel market. If we want to enumerate the most important factors of price growth in steel markets, the exchange rate is the most important factor. Unfortunately, the difference between the price of the half dollar and the free market has created the conditions for the creation of rents. On the other hand, due to the questioning of the efforts of the Barjami negotiations, the positive outlook of political relations has been faced with an aura of ambiguity. Continuation of this trend is likely to pose challenges for the new government in the steel sector.

    *** Rising production costs; The scourge of the steel industry

    Despite power outages, rising production costs, sanctions and the high rate of the dollar in the current market, we see that steel has maintained its production line with strength. Supply in the country is twice the real demand, demand is almost wedged does not exist and it can be said that it is zero. If production takes place, it is hoped to send and export. No manufacturer in the current unfavorable conditions thinks about domestic consumption and domestic customers. This is a temporary issue. This is a big injury in itself.

    The reason is that construction is not done either. Even before this corona wave, demand was low. So prices have to go down. Steel prices are projected to fall significantly by, say, 20 percent over the next 20 days. Remember this from us. This signal has been heard by almost everyone in the market. But some traders and people who have stockpiled steel and metal products at high prices are looking for surfing. A similar thing happened in November last year for the car industry and the car market. Iran’s economy has become a scene of repetition.

    *** Power outages are the biggest current problem in the industry

    The price of raw materials in Iran has skyrocketed. Some goods are offered above their normal world prices. This issue as a cancer gland can destroy the Iranian steel market. Iran is the tenth largest exporter of steel. The continuation of the growth trend of raw material prices and the provision of subsidies to steel export goods will destroy the domestic steel market. The recession in the steel market will continue as long as raw material prices do not improve. Other infrastructure issues, such as power outages, have also been raised at regular meetings of steelmakers. This has dramatically increased the accumulated losses of manufacturing plants in recent months, and this loss of costs has been offset by the rising cost. The consumer in the current market is surrounded from several perspectives and no institution really supports this key role in the market. It is as if everyone has forgotten that the whole steel chain operates with the aim of gaining consumer satisfaction.

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