CIS suppliers still push up prices despite stagnation in Iran’s billet market

CIS suppliers have been gradually hiking their billet prices for Iran in recent weeks. Currently, they are offering 100 x 100 mm to 150 x 150 mm sizes at $400-410/mt CFR Iranian northern ports while they were talking of $380-390/mt for the same destination just one week ago and even less a couple of weeks ago. Interestingly, these increases have taken place in the absence of any surge of demand capable of pushing prices higher and higher. On the contrary, the existing stagnation in the market has given rise to expectations for further price reductions.
 
There are serious doubts as to whether the CIS suppliers will be able to absorb orders at the above price range, given the weakness of demand.  Another factor which appears unlikely to allow the CIS suppliers to maintain their increased prices is the high inventory of billet at Iran's northern and southern ports. These inventories will first have to drop to low levels before local billet prices can rally. Of course the increase in oil prices in recent weeks could justify a rise in production costs of steel.
 
Khouzestan Steel, one of the main local suppliers of billet in Iran, is now offering 150 x 150 mm material at about $385/mt ex-works for one-to-two week delivery and for payment in cash. Meanwhile, local traders importing billet from CIS countries are offering billet at $390-400/mt ex-stock Iranian northern ports. Last Monday, May 4, an Iranian trader was unable to sell ready stock Russian billet (Severstal production) at $393mt ex-stock Iranian northern port of Anzali via Iran Mercantile Exchange, as buyers would not go higher than their bid of $390/mt.
 
Meanwhile, according to the Iranian customs authorities, Iran imported 3.8 million mt of semi-finished steel (mainly billet) in the last Iranian year (ended March 20, 2009) compared to 4.1 million mt in the previous Iranian year - reflecting to some degree the increasing stagnation in the Iranian billet market.