Hot rolled coil prices have started to decline again in the Iranian domestic market following a few weeks of stability. The most recent sale of 2-8 mm hot rolled coil was concluded this week at $490-500/mt ex-stock Tehran, down from $510-520/mt the week before.
Mobarakeh Steel, Iran's biggest producer of hot rolled coil with an annual capacity of 4.2 million mt has been operating at higher than its nominal capacity in recent months in Iran due to the high demand levels in the market. Meanwhile, Ferro-Gillan, a privately-owned rolling mill with a yearly capacity of 1.5 million mt, is unable to operate at full capacity at present due to the shortage of slab.
On February 9 Mobarakeh Steel's latest sale of hot rolled coil took place through the Iran Mercantile Exchange - at a price level of around $465/mt ex-works with delivery of 40-70 days. For a few weeks now Mobarakeh has not altered its hot rolled coil prices in the local market, though in recent days the market has been experiencing a new declining trend. However, there is no doubt that Mobarakeh will reduce its prices again if the existing decline trend continues to prevail in the local market in the coming days.
Iran imports its shortfall of hot rolled coils mainly from Russia, Ukraine and Kazakhstan. The imported material usually has a lower price than supplies from Mobarakeh as the quality is usually lower than that of the Iranian producer's material. Russian suppliers are currently offering hot rolled coil at $440-460/mt CFR Iranian Caspian Sea ports; however, there have been no significant transactions in recent days due to the market stagnation and other factors, including UN sanctions against Iran, the high inflation rate of around 30 percent, the presidential elections expected in May or June 2009, and the decline of oil prices over recent months.
According to Iranian customs data, Iran imported about 690,000 mt of hot rolled coils (of 3 mm and lower thicknesses) in the first 10 months of the current Iranian year (started on March 21), while it imported 640,000 mt of the same product in the corresponding period of the previous year.