After a rapid price increase of over 20 percent during February and March 2007, the Iranian domestic flats market is now experiencing some stagnation in the wake of the Iranian New Year holidays (21.03.2007 - 25.03.2007). Currently, prices are still high but there have not been significant transaction levels in the local market due to the New Year holidays. Of course, the price increase seen in the Iranian local market is partially a reflection of the global trend. However it exceeds the global increase rate as there are some other parameters which affect the local market.
There is no doubt that prices will resume their upward trend in the post-holiday period, especially if we take into account some global as well as local factors which will have an influence on the Iranian market in the weeks ahead.
Global factors:
- Rising price of oil which has a knock-on effect on steel prices globally
- New UN resolutions against Iran which restrict bank loans and other financial services.
- US sanctions against Iran, targeting in particular the banking/financial sector
Local factors:
- Expected increased demand in the local market in spring and summer this year
- Annual increase by government of oil prices in the local market (about 20-25 percent)
- Exclusive production of flat steel in Iran by Mobarakeh Steel Co. and Kaviyan Steel Co.
- Damage caused to local supply by the exports of Mobarakeh Steel Co.
- Restrictions imposed by the Iranian authorities on imports of low quality products from the CIS and China
Currently in the Iranian wholesale market, hot rolled coil of 3-6 mm thickness produced by Mobarakeh has a price of $680-700/mt, while HRC of 8-35 mm thickness produced by Kaviyan costs $770/mt.
Cold rolled coil of 0.50-2.50 mm thickness produced by Mobarakeh has a price of $670-750/mt in the Iranian wholesale market, while hot dip galvanized coil of 0.40-2.00 mm thickness from the same producer costs $890-1,070/mt.