Mobarakeh Steel Company, the main Iranian supplier of flat rolled products, has closed its sales for two weeks due to the Iranian New Year holidays, which continue until April 4. Meanwhile, local traders of hot rolled coil are operating only partially over the holidays. Such closures and partial activity during the holidays have resulted in a significant variation in offer levels. Currently, 2-5 mm thick HRC is being offered at $500-540/mt ex-stock Tehran, up from $480-500/mt just before the holidays (started March 21).
Hot rolled coil has the largest market share among flat products and Mobarakeh plays the main role in determining hot rolled coil prices whenever there is a seller's market. However, we been in a buyer's market since mid-2008 after steel prices started to collapse globally and as oil prices likewise began to drop down. In the present period, Mobarakeh is hunting for buyers in this buyer's market, just like any other steel producer.
In recent months Mobarakeh reduced its sales price for hot rolled coil several times in order to bring itself in line with market circumstances. In addition, the Iranian government's cancelation of the import duty on hot rolled coil and some other finished products, implemented in the second quarter of 2008, had already increased competition in the market for hot rolled coil, as local traders rushed to import this material. The traders imported a large volume of hot rolled coil in 2008 and 2009, contributing to the high inventory levels in the market at present. Naturally, local traders with high HRC inventories are in a strong position to compete with Mobarakeh's prices and, indeed, can easily break this producer's prices under the current market conditions.
Finally, according to the Iranian customs authorities, Iran imported 1,023,497 mt of hot rolled coil - mainly from CIS countries - in the first 11 months of the last Iranian year (21.03.2008-20.02.2009).