Debar prices increases considerably in Iranian market

Debar prices in the Iranian market have increased considerably during recent months. Currently, the price is at a level of $720-750/ton, whereas it was about $650-680/ton around two months ago. In support of domestic rolling plants, the Iranian government increased the customs duty on debar from 11 percent to 20 percent over four months ago. This high duty destroyed the interest of traders in importing debar. On the other hand, despite a theoretical installed debar production capacity of eight million tons per annum in Iran's rolling mills (five million in the private sector and three million in the state sector), in reality Iran cannot produce more than 1.5 million tons of debar per annum. The main reason for this failure is the shortage of billet supply for the rolling mills. These do not have sufficient financial resources to import billet in large volumes, and thus only use 30 percent of their capacity at present. In brief, high customs duty for imports along with the low financial resources of the rolling mills has caused a supply and demand imbalance, as a result of which we nowadays observe rising prices of debar in the Iranian market. Of course the Iranian government has commenced negotiations with the rolling mills (especially those of the private sector) with a view to offering bank loans etc. In addition, the government may also reduce customs duty to zero for billet (currently at four percent), hoping thereby to encourage rolling mills to increase their production and ultimately to meet the local market demand.