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    Temporary correction or drop in domestic steel prices?

    شناسه : 54774 28 شهریور 1400 - 11:30
    Due to the market perception of strengthening supply in the commodity exchange, the continued decline in world prices, the shock of falling iron ore prices along with weak demand, all the fundamental factors of the market are in favor of falling steel prices. Of course, the market is always resistant to declining trends due to price stickiness. Due to power outages, prolonged blackouts and long shutdowns of steel production lines, the supply of steel products decreased.
    Temporary correction or drop in domestic steel prices?
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    Examination of steel price charts in the domestic market over the past few days shows a significant drop in steel prices. It seems that with the change of government and the paradigm governing the market, we will see a change in procedures in the price trend. Various factors have changed in recent weeks that could change the course of prices. For example, the change of seasons adjusts the need for energy in the country. This will relieve the supply side pressure a bit. On the other hand, when news is heard from Borjam, the foreign exchange market will give the green light to this issue. It seems that the factors that reduce the price of steel are emerging. A drop in steel prices is inevitable if the above occurs. In the following, we will evaluate these conditions in more detail. Please be with Artan Press

    The stock market is currently recognized as a clear and transparent path in the pricing of steel products. But the market has shown in recent weeks that it can move in the direction of fluctuating certain people. For example, the order to stop the supply of ingots or export restrictions were the factors that made the price path in the commodity exchange out of transparency. At present, steel products are priced based on supply and demand in the official market of the Commodity Exchange. In the traditional market and trade, manufacturers and distributors also adhere to the rules of this market to some extent. Given that supply has grown over the past two days, the drop in steel prices is likely to be a stereotype in market analytics.

    *** Power supply crisis and inflammation of the steel market

    The issue that has heightened the inflammation of the steel market in recent months has been the frequent and powerless power outages of industrial units. Due to power outages, prolonged blackouts and long shutdowns of steel production lines, the supply of steel products decreased. Following that, prices grew by ten percent or even more. But with the arrival of autumn, it seems that we are gradually moving away from the historical peaks of electricity consumption. Of course, it should be borne in mind that the energy shift will go to gas. In general, the problem of the electricity crisis will not exist for at least the next few months. This has made the supply outlook more optimistic. It seems that the sum of these signals has led to a drop in steel prices in the market in recent days.

    *** The market received a signal of a drop in steel prices

    The market has received and understood the signal of a drop in steel prices. Recently, we are witnessing the growth of supply in all steel bases of the country. The price of the country’s steel products is determined in proportion to world prices, but if the restrictions caused by production (such as power and energy outages) are removed, we hope the price of steel products in the second half of the year will decrease and improve with more products.

    *** International factors involved in falling steel prices

    Of course, there are factors at the international level that can stop the decline in steel prices. The price of crude steel is a key factor. The impact of rising global prices for crude steel and steel products in global markets cannot be ignored. Because any increase or decrease has a direct impact on the price of products in domestic markets. The global market has tended to see rising crude steel prices in recent weeks, which is a bit of a concern in the domestic market. This factor can enter the Iranian steel market into a relatively long period of recession until the end of the year. We hope to see a decrease in prices in the near future, ie the second quarter, by improving supply and increasing production. If the price of currency or world prices rises, we can at least say that it will digest other factors influencing the rise in prices.

    *** Steel market developments through supply valves

    It is not bad to look for market developments and the possibility of falling steel prices through market supply. According to the final statistics of commodity exchange transactions; Yesterday, out of 132,000 tons of granulated iron ore; only 30,000 tons of Khuzestan Steel sponge iron and sponge iron concentrate reached the table. In a way, out of 30,000 tons, 3,000 tons were sold as futures and 5,000 tons as machining with a base price of 83,000 Rials, which is 4.6% lower than the discovered price of the previous supply of this product. Thus, only 6.1% of the supplied raw materials were traded. The low volume of raw material trading is a definite signal to the fall in steel prices. It remains to be seen whether these transactions will be repeated in the coming days.

    *** Iron Ore Market; Full-length mirror of demand decline

    The evaluation of the iron ore market is a full-fledged mirror of the state of the steel market in terms of transactions. Given the current situation, the demand for steel is not high. We do not have price increases in the market. Prices will not increase due to challenges and growing demand. This is an opportunity that global rates and environmental conditions have given the head of state to manage the steel market. If this opportunity is not used, the first six months of next year will definitely be too late. The fall in steel prices can take place in a continuous process so that the market becomes accustomed to accepting prices.

    *** Solve a key energy crisis in the steel industry

    In the current situation, resolving the electricity crisis can be a major step in lowering steel prices. There was a potential risk in the current situation. If demand increases, we will face a serious challenge. In the short term, we should see the smartening of the power reduction system and 10% demand in all industries and based on their strategic nature. Rehabilitation of power plants should be on the agenda in the second six months of the year. This can prevent the situation from recurring next year. What should have been done in the previous government, but in the shadow of sanctions And Trump’s maximum pressure delayed that. With the fall in currency prices, we are witnessing a decline in prices in commodity markets. The drop in steel and iron prices in recent days has also had a significant impact on this issue.

    *** Key factors in the decline in steel prices

    Due to the market perception of strengthening supply in the commodity exchange, the continued decline in world prices, the shock of falling iron ore prices along with weak demand, all the fundamental factors of the market are in favor of falling steel prices. Of course, the market is always resistant to downward trends due to price stickiness. In general, it can be said that if the favorable wind blows from the foreign exchange market and the promises of opening foreign exchange come true, the probability of starting a corrective process of prices in the domestic market is high. However, one must be cautious in making such a promise given the volatile currency conditions.

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