CIS suppliers reduce billet prices for Iranian market

CIS suppliers have reduced their billet offers for the Iranian market following a fall in their prices for other markets. They are now offering 100 x 100 mm to 150 x 150 mm billet at $410-420/mt CFR Iranian northern ports for production in September and delivery in October, down from $430-440 two weeks before and $440-450 three weeks previous. Some market observers attribute the fall in CIS billet prices to the decline of oil prices in recent weeks, while, furthermore, the approach of Ramadan usually weakens market demand in Muslim countries, especially in the Persian Gulf.
 
Iranian billet buyers, most of which are privately-owned re-rollers, had resisted the rising trend of billet prices during previous weeks, refraining from entering into serious negotiations with CIS suppliers, apart from a few purchasers who were in urgent need of billet. Most Iranian billet buyers considered the rising trend to be just temporary, given the conditions in the local and global markets. The current declining trend has proved them to be correct. Iranian customers are now looking forward to ex-CIS billet prices lower than $400/mt CFR as the existing price levels of billet and finished products (rebar in particular) do not allow them any profit margin.
 
In spite of the financial restrictions facing most privately-owned rerollers in Iran and which prevent them from importing sufficient quantities of billet and other semi-finished materials, local private sector rerollers were able to produce 1.1 million mt of finished products (mainly rebar) in the first quarter of the current Iranian year (started March 21,2009), representing an increase of 22 percent year on year. Iran's privately-owned rolling mills depend mainly on imports of billet from other countries, principally the CIS. The increase in the output of local rerollers indicates that there would be strong demand for billet in the Iranian market if the rolling mills had sufficient financial resources available for the import of billet - especially considering that the private sector rolling mills in Iran have a combined capacity of about 12 million mt per year.