In the Iranian domestic market I-beam prices for 140-180 mm sizes have already reached a range of $1,010-1,050/mt on ex-stock Tehran basis, up from a range of $980-1,015/mt last week. The I-beam market, just like the market for other steel products, reflects the global trend which is seen in semi-finished material (bloom and billet), though local parameters sometimes intensify or give relief from the global market impact. It is about 40 days since Esfahan Steel Co. (main state-owned supplier of I-beam in Iran) closed its sales due to pressure from the Iranian authorities in relation to its prices.
The Iranian authorities are well aware of the direct influence that sales by Esfahan Steel Co. have on market prices. They know that the market price levels will increase promptly if Esfahan Steel hikes its prices, while, on the other hand, Esfahan Steel cannot stick to its old prices as they are very much lower than the existing market levels. However, Esfahan's prices have traditionally provided the reference point used by traders for pricing I-beam in the Iranian market.
Esfahan Steel Co. produced about 1.6 million metric tons of I-beam in the last Iranian year (21.03.2007-20.03.2008), while Iran imported about 1.2 million metric tons of I-beam mainly from the CIS countries and China during the same period. This shows that there is a market of around three million metric tons for I-beam in Iran, while local production is able to supply over half of the market's requirements. Of course, there are a few private sector I-beam rolling mills which are under construction at present, but the shortages of bloom and billet in the local and global markets means that they will find it difficult to work at full capacity when they come on stream in the future.
Esfahan Steel Co. is going to supply about 50,000 metric tons of I-beam and rebar in sales today, Wednesday, May 7, on the Tehran Mercantile Market - its first sales of the current Iranian year 1387 (started 21.03.2008). All traders are looking forward to today's sales by Esfahan Steel, and most are expecting that the sales will be followed by another price increase in the market. In the meantime, there are reports regarding the possible reduction of customs duty for I-beam and even some other products, which could influence market prices temporarily if approved by the Iranian authorities.