CIS billet suppliers are striving to hike their prices for the Iranian market while local traders, just like traders in other markets, are seeking to keep their bids as low as possible. Following their return from their long New Year holiday, CIS suppliers have offered 3SP/PS and 5SP/PS billets at $430-450/mt CFR Iranian northern ports (e.g. Anzali) while Iranian importers are mostly sticking to the prices of $400-420/mt CFR Iranian northern ports seen in the last days of December 2008. It is heard that some transactions have been completed in the range of $420-430/mt CFR Iranian northern ports.
The efforts of the CIS suppliers to raise their prices have not yet been successful due to the existing market stagnation and the weak demand. They have been obliged to enter negotiations and to show some flexibility in their prices as they know that there are not too many takers for their products at the present time. There does not seem to be any possibility of a recovery of the market in the near future due to the prevailing global circumstances, and so only slight fluctuations are likely to be observed in prices.
Northern areas of the Caspian Sea are frozen over at present, and so shipping in the sea has been restricted, with freight charges rising to about $30/mt for shipments from the Russian ports of Astrakhan or Olya to the Iranian ports on the southern shores, and to about $20/mt from the Russian port of Makhachkala also to the Iranian ports.
Meanwhile, the banking sanctions imposed against Iran have seriously restricted the country's international transactions. Some suppliers do not accept any letters of credit from Iranian banks, while others are willing to accept letters of credit just from a limited number of Iranian banks. Naturally foreign banks which accept letters of credit from Iranian banks insist on very high banking charges for the Iranian party due to the higher risks involved. It is not easy for buyers to obtain letters of credit from banks acceptable to foreign suppliers. The another option is cash payment which is more difficult given the tight cash flow situation among Iranian buyers, and especially among rolling mills.