Low demand in Iranian long steel market, raw material costs on high side

Monday, 11 August 2014 16:52:08 (GMT+3)   |   Istanbul
       
Market sources indicate that producers' rebar prices in the local Iranian market are at $580/mt ex-works, while domestic billet quotations are standing at $520/mt ex-works, both including eight percent VAT. Demand in the Iranian rebar and billet markets is on the poor side as the government's budget for construction projects has remained low. Meanwhile, domestic scrap prices vary in the range of $380-390/mt delivered, including eight percent VAT, while local steelmakers have considered the raw material prices to be on the high side. Iranian mills mostly prefer to purchase direct reduced iron (DRI) and iron ore from China, though imposition of 25 percent export duty on such materials in China has exerted pressure on Iranian producers.
 
On the other hand, ex-Iran billet offers are around at $514/mt FOB, while Iranian export offers for 16-25 mm rebar are at $560/mt FOB. Afghanistan and Turkmenistan are the main export destinations for Iranian rebar suppliers.
 
In addition, Turkish mills' billet offers for Iranian buyers can be found at $530-540/mt FOB, but, given the gap between local prices and Turkish offers, it is hard to find buyers for Turkish materials in Iran. In addition, there is no supply issue in the Iranian market as the country was the biggest crude steel producer in the Middle East in 2013, according to the World Steel Association's latest press release. Iran produced 15.4 million mt of crude steel in 2013, a 6.6 percent rise compared to 2012. Iranian steelmakers plan to produce a total of 16.5 million mt of crude steel this year, even though the annual crude steel capacity of the country is 24 million mt. 

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