Iran’s steel market is accompanied by many ambiguities. Until yesterday, there was talk of ambiguity in pricing and trading methods. But ambiguities seem to have entered the export route. steel export restrictions are a hot topic these days. In the market, we are witnessing export barriers in the steel sector. Even some stock market propositions have changed. With this situation, we can not expect the growth of industries. Assessing the new limit has been an unexpected event in the current market. Literally, the market is associated with a passivity in policy-making. In the following, we will evaluate these unhealthy conditions. Please be with Artan Press.
*** different statements in domestic steel market of Iran
The current market is accompanied by a series of positive and negative statements about the trend of steel transactions and the export situation, which we must evaluate and calculate the overall result. Let’s start with the issue of export licenses steel export restrictions. The country is in a situation where it needs exports more than ever. But it seems that the sheet has been executed differently. The Mining Industries Office of the Ministry of Silence announced in a letter to the Export and Import Regulation Office of this ministry, the list of units allowed to export intermediate steel (billets, blooms and slabs). As the new government takes office, Rouhani’s administration has imposed new restrictions on the export of steel ingots. The work has reached the point where the names of 21 companies have been removed from the list of authorized exporters of steel ingots. It is very clear that these conditions will damage the export record of Iranian steel.
*** Growing factors of negative growth of Iranian steel exports
The year 1400 has not yet been a good year for the steel market. On the other hand, the corona storm and the daily death of 700 people in Iran from this disease have kept the markets in turmoil steel export restrictions. On the other hand, power outages have pushed the production process to the brink of shutdown.
Although the country is in dire need of steel export restrictions and foreign exchange earnings, the Ministry of Mines Industries Office of the Ministry of Silence has issued licenses to export steel ingots by large companies such as Kaveh South Kish Steel, Chadormelo, Isfahan Steel and Arfa Iron and Steel for a quarterly period. Which starts on September 1, has been canceled.
These companies account for about 65% of Iran’s steel ingot production. Is this something other than monopoly and disrupting the market order? What is the real purpose of these decisions? steel export restrictions has no justification in the current situation.
*** New export restrictions; From rumor to action
In August, there were rumors about the implementation of this plan. But with the new government approaching, analysts have ruled it out. But to everyone’s surprise, this list has been presented to the market. The list announced by Saifullah Amiri, Director General of the Mineral Industries Office of the Ministry of Silence, is valid for three months from September 1, 2014. Manufacturers of billets, blooms and slabs whose names have been declared to customs during this quarterly period do not need to receive steel export restrictions from the Ministry of Silence.
*** Extent of steel export restrictions plan in the upstream steel chain
The issue of export restrictions does not end with steel ingots alone. Some mullahs in the upstream steel chain are also involved. New restrictions on medium steel exports are also being seen in the last days of Rouhani’s government. The list of companies allowed to export intermediate steel includes 21 companies; While in the previous list, which was published in May this year, the names of 42 companies were seen. As a result, 41 companies have lost their licenses to export steel ingots, and new restrictions have been imposed on steel exports.
*** List of companies exempt from steel export restrictions
Of course, contrary to the list published in cyberspace and the name of Khuzestan Steel Company is not seen in it, the main list includes 21 companies and Khuzestan Steel is among the companies allowed to export middle steel. However, as we have said, large steel companies in the stock market, such as Kaveh South Kish Steel, Isfahan Steel, Chadormelo, and Arfa Iron and Steel, have been removed from the list of authorized exporters of steel ingots. The new export restriction must be applied immediately to all companies.
*** The need to reduce prices in steel exchange offerings
The new government is facing the onset of the need to lower prices in many commodity markets. From the foreign exchange market to steel and housing, everyone is a priority. The new government’s signal to the country’s steel market has been a 5 percent reduction in the allowable base rate for steel supply on the commodity exchange. The media coverage of the base rate of supply of ingots confirmed this retreat from the ceiling, although no supply was eventually formed steel export restrictions. Public opinion polls and collective intelligence expect the new government to reduce or at least stop the upward trend in prices. This should be made possible by reforming the supply trend on the domestic stock exchange. The stock market needs more fundamental transparency than ever before. Lifting the new export restriction could save the country’s stock market.
*** The need for convergence of Iranian steel prices and the cis region
The CIS bullion has moved away from its long-term uptrend channel over the past few months, falling to about $ 85 from its $ 720 peak to date at $ 635. Experts believe that the US Federal Reserve’s monetary policy is the main cause of the decline in commodities. As gold has fallen more than $ 100 in the past month, this global price drop should be used to adjust domestic prices. It may seem that in these circumstances, steel export restrictions are not in the interest of the country. But it should be noted that under any circumstances, the country that claims to be the tenth largest steel exporter must have an effective presence in the market. This shows the resilience of the commitments of Iranian producers. The new export limit greatly reduces the resilience of steelmakers.
*** Incompatibility of supply and production with Iranian steel exports
Evaluation of production and supply statistics of steel products in Iran shows that the supply situation in the country is not in conflict with steel exports. For example, scrap of 10,000 Tomans and the signal of the existence of bubbles in the domestic market is a topic that can be the topic of this speech. Experience and proven evidence, a balanced and reasonable rate of ribbed rebar in our domestic market, under normal circumstances; It has always been around 35 to steel export restrictions 40% on iron scrap rates.
This means the average price of ribbed rebar currently on the market; At least 1500 to 2000 Tomans per kilogram is far from the rial equilibrium rate. A new export restriction has also entered the price margin. In other words, we are currently facing at least a 10% surplus of the normal margin of the total of two areas of ingots and rolling in the domestic market. This margin can easily be supplied from a place other than steel export restrictions domestic market. Basically, this approach can moderate the internal price of steel. Steel exports can be planned at this 10% margin. This can turn a threat into an opportunity.
*** Evaluation of the base rate ceiling in the commodity exchange
Currently, according to the definition of the ceiling of the base rate of steel supply in the commodity exchange; Domestic rates are on the red line and price thresholds are based on steel export restrictions, and this is enough to prevent the prevailing psychological climate of emotional and capital demand in the market. There is the opinion of the government, the parliament and the government. In a recent report, Bloomberg acknowledged that Iran did not ransom the United States.
Biden (US) is forced to back down from his extravagances during negotiations with Iran. Because the insistence on the current US extravagance has been fruitless and Iran knows the ways to overcome the sanctions and Biden seeks to remove some sanctions restrictions through nuclear negotiations with Iran. This could make steel export restrictions heavier. Therefore, new self-sanctions and new export restrictions should not be created at this time.
The main important propositions affecting our country’s steel market are that now the audience must, in summarizing these propositions, finally decide for itself what policy to adopt for its business in the future, and the conclusion of these propositions is quite appropriate. Someone will lead. We are optimistic about the future and we do not take these price fluctuations of the steel market very seriously today and we believe that the government of Mr. Raisi is against any further increase in prices in the domestic market and is seriously seeking to steel export restrictions adjust and stop the unbridled trend of price increases. Nor can it be a sufficient reason and justification to continue the current out-of-control situation of the country’s steel market. The new export restriction could be a major industry loss for the country.
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