26/06/2023
Iran Steel Market Trend in Week 25th , 2023
Weekly Analysis:
In the world market:
In the global markets, prices have reached the bottom. Despite the news coming from the markets indicating that the downward trend has stopped, there is no hope for an increase in prices in the short term as it is summer holiday season in Europe and USA and rainy season in the Far East. Chinese government is trying to stimulate its economy by lowering interest rates and increasing bank credits. Signs of social tensions, such as the increase in unemployment among young people has forced the government to adopt methods to stimulate economic growth. Political movements in the Middle East will improve more economic prosperity but this won’t work in short term.
In the domestic market:
In the domestic market, government's policy is to make prices downward in order to limit inflation rate on the one hand and to strengthen export on the other hand. For this purpose, the government took three policies through the mercantile exchange including limiting demand level, increasing supply level and the downward pricing policy. With this policy, along with expected inflation reduction, due to hopes for economic openings and the return of blocked currencies, the market went into stagnation. It is predicted that the floor price of billet will fall to below USD 538/mt in the coming days. While the price of export billet is at least USD 480 /mt. It Seems the government has reached its goals. The second goal of the government, which was to increase export, has been achieved during the last quarter, the export of semi-finished steel products has grown by 33%, the export of flat products by 40%, and the export of steel beams by 108% and DRI by 204%.
The downward trend of prices due to the pressures of government and the psychological atmosphere of the market has led to the point that only 23,933 tons of the 192,957 tons of rebar supplied in the IME were traded on last Wednesday. This trend, along with the restrictions of banks' facilities, has increased liquidity problems of mills. Naturally, they will not afford to buy billet. Failure to buy billet in the commodity exchange will cause its price to fall for the coming weeks, in this way, the problem of liquidity will be transferred to small producers of billet, especially induction based ones, will put them under severe pressure and production may stop. If the government does not change its policy and direct the domestic market to stability, this month will be very turbulent.
