For the first time in the history of the Corona outbreak, Iranian politicians have decided to close the country for a short period of time. Nationwide closure can make Iran’s economic path slightly different from the factors presented in previous scenarios in the short term. The steel market will be affected by various aspects of this issue, which we will describe in the following. This analysis has been prepared by studying and benchmarking the steel industry. Therefore, the aspects of buying, selling, and the supply and demand side have been considered without bias. Stay tuned to Artan Press.
*** Nationwide closure ; The width of new government to enter politics
The new government, in order to show at the beginning that it will behave differently from the previous policies, put the audacity of a nationwide closure on its agenda. In this regard, the spokesman of the National Anti-Corona Headquarters announced the details of the closure of the country, the ban on traffic and the closure of offices and banks and some other jobs. With the Nationwide closure of banks, government offices and stock exchanges, the path of industrial transactions, especially in the field of iron and steel, will be practically disrupted if they are not closed.
Yesterday, we saw the advance of the industrialists to close the industrial enterprises, which, of course, is debatable. Several factors contributed to the acceptance of this closure. One of the most important of them can be considered the lack of policy and planning of the steel trade route in recent days.
*** Political signals to the country’s steel market this week
The 13th government intends to give important signals to Iran’s markets and economy by curbing inflation and inflation and possibly moving in the direction of a Nationwide closure in the coming days. Definitely one of the markets that will receive a reducing effect from these signals will be the market of ingots-based steel products. One of the rent-seeking markets in Iran is the ingot market, the billion-dollar rent of which was elaborated in detail in the recent analysis of Artan Press.
The nationwide shutdown signal was so effective that it did not allow the price of this product to grow significantly in this market after not being offered for three weeks, and even the trading price of steel ingots in this market compared to its trading rate in the open market during the previous weeks. It has been about three weeks since the official launch of this product on the stock exchange and the market was thirsty for downstream steel supplies after Nationwide closure . So it seems that the expectations and behavior of consumers in the current situation with the analysis of the recession in recent months has changed slightly.
*** Delta coronavirus epidemic and acceptance of guilds for nationwide closure
Published images of the dire condition of hospitals and medical centers, unprecedented statistics of deaths from the Corona virus, for the first time raised fears in the public that the disease could be more dangerous than the public imagined. It can almost be seen that the streets are deserted and the time people spend in the community has been significantly reduced. Market participants also seem to be afraid of this issue and have agreed to Nationwide closure businesses.
The nationwide closure at this time was met with the least opposition from the market. On the other hand, infrastructural problems in the industrial sector have made steelmakers and other artisans more receptive to this shutdown imposed on them. The country’s steel and cement industry has long been plagued by electricity and energy shortages. It seems that this holiday will bring the general level of the country’s electricity refinery to a stable level and provide the ground for production planning.
*** Pathology of steel production and supply in recent months
But the question arises that in the current situation and coinciding with the nationwide closure of the country with the challenges of electricity supply, how will the prospect of steel production and consumption proceed? The issue of the peak of the Corona virus and the electricity challenges in the steel industry has been circulating in the market in the form of Tomans for about a month. Due to the closure or significant decline in production among the country’s steelmakers during this period, most of these producers have started to sell the product in their warehouse, and naturally, the inventory of these units is Nationwide closure currently running out.
Therefore, the continuous power outage and fluctuations of these units can face more shocks in the coming weeks Nationwide closure in the country’s steel market. It is possible that at the beginning of its activity, after the nationwide closure of the country and the markets, Davaat will turn to orderly pricing to control the market. This is a big risk in starting a government. Entering this abyss will lead the government to a very scary path in steel pricing. This is a warning we mentioned before it happened.
*** Steel price forecast after forced holiday
Most likely, after leaving the nationwide closure phase, we will see a price peak in the supply of steel products. No matter how hard the government tries to stop this price increase, it seems unlikely to get anywhere. Stabilized economic behavior cannot be prevented by control measures. A similar issue has occurred in the ingots and rebar market in recent days and will most likely be repeated.
After three weeks of stopping the supply of steel ingots in the physical market of the Commodity Exchange, this market hosted the supply of 126 thousand tons of steel ingots. The suppliers offered this product with a base price in the range of 12 thousand 850 to 16 thousand 560 tomans per kilogram in the commodity exchange, which was the historical record of the supply price of steel ingots in this market. Supply control had made this product well received. This is likely to happen next Saturday.
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