Iranian state-owned steelmaker Mobarakeh Steel has twice raised its price for HDG in recent days. On August 3 the producer sold HDG to local customers through the Iran Mercantile Exchange (IME) at Rials 7.72 million/mt (about $772/mt) with 110-day delivery and for cash payment, while on July 27 it sold the same material at Rials 7.55 million/mt (about $755/mt) ex-works with 117-day delivery and for cash payment. On July 21 Mobarakeh sold HDG via the IME with a shorter delivery period of 92 days at Rials 7.22 million/mt (about $722/mt). In short, last week and in the current week Mobarakeh has raised its price for HDG in the local market by a total of about $50/mt.
Mobarakeh's increased price for hot dip galvanized has pushed free market prices up to higher levels in recent days. Currently, 0.50- 1.00 mm hot dip galvanized coils are being transacted by local traders at Rials 9.3-11 million/mt (about $930-1,100/mt) ex-stock Tehran, i.e. about $10-70/mt higher than last week.
Most local traders were expecting such a price increase by Mobarakeh due to the large gap between Mobarakeh's sales prices and the free market prices. Indeed, this large gap still exists even after Mobarakeh's recent increases. In general, Mobarakeh adjusts its prices under the influence of the local market prices on a frequent basis.
With the large difference between Mobarakeh's prices and local market prices providing good margins for local traders, there is naturally strong demand from local traders for HDG from local suppliers like Mobarakeh, thus causing the latter to hike their prices. On the other hand, the increased HDG prices from overseas suppliers in recent weeks, which have been backed by the rising trend of oil in the global markets, can be indicated as another factor behind the price hikes of local suppliers.
The volume of Iran's HDG imports has declined in recent months - another factor which helps to boost local market prices. According to the Iranian customs authorities, Iran imported about 38,000 mt of hot dip galvanized coil in the first quarter of the current year (started on March 21), compared to about 51,000 mt in the same quarter of the last year.