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.