CIS suppliers have raised their offers to the Iranian market for 100 x 100 mm - 150 x 150 mm billet to $450-460/mt CFR Iranian northern ports for September production and November delivery following several weeks of price stability and even a rapid fall in prices about two weeks ago. CIS suppliers were offering billet in the range of $430-440 in the past few weeks and even cut their prices to $410-420 for a short while two weeks ago. In spite of certain reductions in CIS suppliers' prices recently, they were unable to attract many orders from the Iranian market as most Iranian rolling mills suffer from cash shortages, which prevent them from placing large orders. Hopes of a price reduction have prevented most buyers from entering the market, although those urgently in need of billet are unable to postpone their purchase orders. In fact, buyers mostly do not believe that current CIS billet offers are workable but are simply based on attempts by sellers to hike their prices.
Some European trading companies which sell CIS billet in the Iranian market accept letters of credit from Iranian bank. This helps boost their business especially as most foreign suppliers reject any international transactions with Iranian banks due to the UN sanctions against Iran's uranium enrichment program.
The new CIS billet prices came as a big surprise to local buyers as nobody expected such high prices immediately after the reduction of two weeks ago. In spite of the increase, local buyers of billet are expected to return gradually to the market in the coming weeks and then actual workable prices will be seen as both buyers and sellers enter negotiations.
The increased price of CIS billet may also do Iranian billet producing mini-mills a big favor as it may give them greater room to hike their prices, thereby allowing them improved margins. Local Iranian billet producers are currently offering billet at $440-460/mt ex-works to the local market, while ready stock CIS billet is now in a price range of about $440-450/mt in the Iranian market.