CIS billet is now being offered at about $440-450/mt CFR Iran's Caspian Sea ports, whereas actual transactions have been concluded in the range of $435-445/mt CFR same ports. Such prices have been registered against the background of substantial increases in shipping freight charges from Russian ports to the Iranian ports on the Caspian Sea.
Shipping freight charges in the Caspian Sea usually increase in winter due to the cold weather conditions and the freezing of the sea, especially in its northern parts. Currently there is a freight charge of $45/mt from Astrakhan, Russia's main port on the northern shore of the Caspian sea, to Anzali port on the southern shore in Iran. In summer last year, a freight charge of $16-17/mt was in effect for the same route. Regardless of the strong increase in shipping freight charges, turning to consider the FOB prices, a reduction has been observed in comparison with the last few weeks.
Iranian production billet has been continuing its downward trend in recent weeks. Iranian billet now stands at Rials 4.9-5.10 million per mt (about $500-520/mt) ex-works - a price which is naturally higher than the price of CIS billet due to the higher production cost involved.
However, the existing stagnation in the Iranian market and the weak demand for billet as well as for finished products has created an atmosphere where prices are more negotiable and where even lower prices are possible. The increased flexibility of sellers at the present time is the direct consequence of the weakness of demand.
Iranian billet consumers, who are mainly in the private sector, are for the time being unlikely to spark any strong surge in demand for two main reasons; low demand for their output (mostly rebar), and financial restrictions which do not allow them to place large orders at present.
Iran imported about 2.6 million metric tons of semi-finished material (mainly billet) in the first nine months of the current Iranian year (i.e. in the period 20.03.2008-20.12.2008) while it imported about 3 million metric tons in the corresponding period of the previous year, according to Iran's customs statistics.