High inventory reinforces winter stagnancy in Iran's I-beam market

Friday, 04 January 2008 10:04:10 (GMT+3)   |  
       

The high long product inventory levels, due to the stocking of such products by the government and by some private sector traders, along with the cold winter weather, have already created stagnation in the Iranian long products market, especially in the I-beam and rebar markets. I-beams of 140-240 mm sizes have already dropped to a price of $800-1,030/mt ex-warehouse Tehran. The downward trend started in early November 2007 after prices had reached their highest level of recent months, i.e. $925-1,275/mt, at the end of last October.  However, the downward trend has continued up to the present while the winter weather has already intensified market stagnation.

During recent weeks, the market stagnation has forced most local suppliers and importers in the Iranian market to reduce their prices, and they are even ready to negotiate further with buyers. As one trader commented, "It really is a buyer's market now. The buyers are already able to determine the price and terms of payment in the I-beam and rebar markets." Esfahan Steel Co. and Iran National Steel Industrial Group are the two main suppliers of I-beam in Iran. They supply their products through the Tehran Mercantile Market; however, sometimes there are no buyers for their products in the current period.

The Iranian market is usually calm during winter as the cold winter reduces construction activity. Meanwhile, the high inventory also makes some buyers suspect that prices may come down even further! Some traders in need of cash have been obliged to sell I-beam lower than the rock-bottom market price.

Iran imported a high volume of I-beam - about one million mt - during the first nine months of the current Iranian year (21.03.07-20.12.07), while it imported only about 400,000 mt in the whole of the last Iranian year (21.03.2006-20.03.2007). Naturally, such a large import volume, coming mainly from the CIS and China, has contributed to the high inventory levels which have meant that supply outweighs demand at present. Of course a large part of the stocked material is accounted for by government imports for development and construction projects, as opposed to purchases from local traders. Due to the lack of local purchases by the government, overall inventory remains high, thereby influencing the market prices. Most traders, however, are expecting a price increase at the end of winter when the market revives again.


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