Declining trend continues unabated in Iran’s HDG market

Thursday, 07 May 2009 10:48:44 (GMT+3)   |  
       

Hot dip galvanized coil prices in the local Iranian market have been declining steadily for a few weeks now. Currently, 0.5-1.25 mm thick hot rolled galvanized coils are being transacted by local traders at about $780-820/mt ex-stock Tehran for immediate delivery and payment in cash, down from $800-860/mt the week before and $840-880/mt two weeks ago.

In early January this year hot dip galvanized coils in the Iranian market stood at a level of $920-1,180/mt. In general, since January prices have been coming down gradually, with the exception of price fluctuations for some HDG sizes caused by low market supply.

On Monday, May 4, Mobarakeh Steel Company, one of Iran's main HDG suppliers with a capacity of 200,000 mt per year, sold HDG via the Iran Mercantile Exchange at about $764/mt ex-works for 75-day delivery and payment in cash. For several weeks now Mobarakeh has kept its prices unchanged, even though free market prices have falling significantly in the last few months. At present the gap between Mobarakeh's prices and the levels in the free market has narrowed greatly, with just a price difference of $16-55/mt now remaining.

Some of the Iranian galvanizing mills, especially the mills in the private sector, have cut back on their output levels in recent months; however, inventory is so high and demand so weak in the market that it is not possible to foresee any recovery in the near future. Indeed, some local traders think there is still some way to go before prices hit rock bottom, especially as local HDG prices are still higher than global levels.

The stagnation in Iran's domestic HDG market, just as in the local markets for most other long and flat steel products, caused a sharp reduction in the import volume in the last Iranian year (ended March 20, 2009). According to the Iranian customs authorities, in the period in question Iran imported 182,000 mt of HDG, compared to 260,000 mt in the previous Iranian year, i.e. marking a reduction of around 30 percent.


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