The steel market bubble in recent months has been linked to changes in the dollar, something that analysts have not overlooked. The maximum allowable base rate for ingots is 14,580. With a simple calculation, it can be concluded that the steel market bubble fluctuates around 8% negatively.
We will first look at the government's decisions a little optimistically. Assuming that there is no news about the export of cheap steel and rebars, and this news is just a rumor. The policy of mandatory pricing and government intervention in industrial rates has become a threadbare policy. It seems that the new government has no plans but to repeat itself. In 1997 and 1998, when the government entered the regulation of the steel products market and took serious interventions to reduce the prices of steel products, a large amount of ingots were injected into the market.
It seems that the government and the parliament will work together to control the iron and steel market in unison. The Islamic Consultative Assembly insists on reducing the price of cement and construction materials, including iron and steel. The situation of the iron market in the current situation is not unrelated to the issue of falling world prices. Eventually, these fluctuations will sooner or later reach the Iranian market. On the other hand, with the approach of Iranian prices to world markets, the impact of this market has become more and more. Some activists believe that due to the continuing decline in world prices and the situation of the Nima dollar exchange rate this week, we should also see a decrease in base prices in the stock market.
It is not bad to evaluate the steel market in terms of export prices. This issue can also be examined similarly for the steel and cement market. In the domestic market of Iran, 12 to 32 mm A3 rebar is offered at a price of 577 Rials per ton of factory door without 9% VAT. Our personal opinion is that on the one hand, we hear that the price of scrap iron is traded around 10 thousand tomans these days. On the other hand, the wise behavior of the central bank in the new government has shown that the government is interested in irrational currency fluctuations and cross-sectional fluctuations in the foreign exchange market and subsequent plowing of all markets; Especially the capital market; does not have. Apparently, it is currently considering the stability of the foreign exchange market. This will help the country's steel markets to make real price discoveries regardless of exchange rate fluctuations.
Instead of encouraging the steel industry, the Ministry of Energy is blocking their way. A fine of 3 billion tomans per day was considered by the Ministry of Energy for overhauling factories. Investing in non-governmental industries in the electricity industry prevents blackouts. But the problem of the electricity industry in the current situation is not solved by private individuals. The private sector budget for the development of the electricity industry is very small.
According to the Iranian Steel Producers Association (ISPA), in the first five months of this year (March 21 to August 22, 2021), Iran has seen a significant reduction in steel production. ISPA data show that producers produced 10.8 million tonnes of semi-finished products during this period. This amount of production, which has decreased by 12% compared to the previous year, is in the Iranian steel showcase.
And noticeable changes. Every effort has been made to enable the commodity exchange to follow the path in which price discovery takes place. The market desperately needs an organized order in pricing. This plan seems to have a high chance of success if implemented properly
The cement market has had unprecedented days in its trading history this summer. The price of the cement market went so far that one can hear talk of 70,000 Tomans per bag of cement in the sales market. The most important reason for the fluctuations and inflammation of the price of this building material can be considered in the continuous cutting of the price of production units. Because this year, for the first time, we saw this trend in electricity distribution. If the rains are limited in the second half of this year, it is likely that next year the living conditions of the people will be very critical. Environmental crises in the current situation will overshadow all markets
He has pointed out this point. A noteworthy point is the $ 20 to $ 30 gap between Iran's export ingot rate and the CIS. It seems that Iran intends to pave the way for its steel price growth with the growth of world iron ore prices in the coming months.
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.
In order to be able to observe the behavior of the market in this area, we must have a look at the price of iron ore. Iron ore has seen a drop in prices in recent days. This area has declined in the domestic and export markets. This seems to be the most important factor in putting pressure on the price of iron ingots in the domestic market