Stagnation in Iran’s HDG market as prices continue to fall

Local traders in Iran are currently transacting hot dip galvanized coils of 0.5-1.0 mm thickness at $1,260-1,555/mt on ex-stock Tehran basis- a price range which is $42-52/mt lower than last week and $85-157/mt less than in the middle of July. Just like long and flat products in Iran's local market, hot dip galvanized has been on a downtrend since mid-July. Nevertheless, local traders are still expecting further price reductions as steel prices are falling globally in the wake of the drop in oil prices. The transaction volume in Iran's hot dip galvanized market has fallen substantially, with most buyers staying away from the market in the hope of additional price reductions. As a result, the market is currently stagnant. Both sellers and buyers are now hoping for stability since nobody wants to conclude transactions as long as the market remains unstable.
 
Most of Iran's hot dip galvanized requirements are produced domestically at present, whereas just a few years ago Iran was importing all the hot dip galvanized it needed. The principal local suppliers of this product include Mobarakeh Steel with a capacity of about 300,000 mt per year, Semnan Rolling and Tube with an annual capacity of 200,000 mt, Fajre Sepahan with a capacity of 130,000 mt per year, and Seven Diamond Industries with a capacity of 100,000 mt per year.
 
Hot dip galvanized imports into Iran mainly come from the CIS via the northern Iranian ports, and also from India and China via the country's southern ports. CIS suppliers use the Caspian Sea route for shipment to Iran at a very low sea freight rate of $20-25/mt; meanwhile, there is a sea freight rate of $40-50/mt from India to Iran and of $70-80/mt from China to Iran.
 
Iran imported about 260,000 mt of hot dip galvanized coil and sheet in the last Iranian year (21.03.2007-20.03.2008 ) and about 70,000 in the last four months, according to the Iranian customs authorities - the latter figure does not show any significant change compared with the corresponding period of last year.