Hot rolled coil of 2-12 mm thickness has already reached a price range of $980-1,075/mt in the local Iranian market. The hot rolled coil market in Iran has been fairly calm during the current week and has not shown much variation in recent days. As the main local supplier of HRC with an annual capacity of five million mt, Mobarakeh Steel Co. plays an essential role in the determination of domestic market prices. The latest sales from Mobarakeh were at $957/mt ex-works, concluded a few days ago through the official sales channel of the Tehran Mercantile Exchange. These sales raised criticisms from many other parties as the price level in question is significantly lower than the levels in the global markets.
The Iranian authorities usually try to limit the uptrends in the local market by keeping down the sales prices of the state-owned mills; however, the effect of such measures does not last for more than a few days and just provides large margins for some intermediaries. Most Iranian traders have now closed their sales and are looking forward to next week when Mobarakeh will again reopen for sales. In the coming round of sales Mobarakeh is expected to hike its prices in light of the existing local and global circumstances, especially considering that state-owned Esfahan Steel Co. raised its prices for long products in its last supply to the market a few days ago.
Meanwhile, the Iranian government recently reduced the customs duty on hot rolled coil from 10 percent to four percent after long discussions and struggles between different interested groups. Of course, there still remains a long list of goods, including some other steel products, which is awaiting the government's decision on the issue of customs duty reduction.
Iran imported about 10 million mt of steel in the last Iranian year 1386 (21.03.2007-20.03.2008), of which about 1.2 million mt was accounted for by hot rolled coil. A higher import tonnage for hot rolled coil is likely in the current Iranian year (21.03.2008-20.03.2009) due to the strongly flourishing market demand, and also because the Iranian authorities have facilitated the import flow by reducing the customs duty. At the same time, however, import prices are going up due to the rising trend in the global markets, as well as due to the additional expenses borne by Iranian traders thanks to the UN sanctions against Iran's uranium enrichment plans.