CIS suppliers are offering billet at $400-410/mt CFR northern Iranian Caspian Sea ports, up about $10 from the week before. CIS billet prices in Iran has been standing at around about $400/mt for a few months now, varying in a range of $10-15/mt. Local customers, mainly comprising privately-owned rolling mills and some traders, usually buy billet from CIS suppliers through certain European trading companies which facilitate the transactions by accepting letters of credit from Iranian banks as well as providing other services. Meanwhile, the surprising thing is that ready stock CIS billet in the Iranian market has a price $10/mt and sometimes even $20/mt less than new production.
A few privately owned billet producers have come on stream in recent years in Iran, while Khouzestan Steel is the biggest state-owned supplier of semi-finished material with a capacity of 3.2 million mt per year. Privately-owned Iranian billet suppliers are currently selling 100 x 100 mm-150 x 150 mm 3SP/PS and 5SP/PS billets at $420-460/mt ex-works. Khouzestan Steel is selling billet at about $390-400/mt ex-works.
Iranian privately-owned billet producers should bear higher production costs as their capacities are low (about 100,000-200,000 mt per year) and they also use scrap which stands in Iran at a price close to the global level, However, state-owned Khouzestan Steel has the advantage of a capacity of 3.2 million mt per year while it uses iron ore as raw material, which has a price lower than the global level.
Local privately-owned suppliers of billet in Iran have reduced their outputs substantially in recent months, and some of them have even halted production as there is no margin for them with the existing price level of billet in the local market.
CIS billet clearly stands at a competitive price in comparison with locally produced billet and so naturally large volumes of billet from CIS countries are being imported into Iran even though the local billet market is still relatively stagnant.