Iranian billet market hit by weakened demand

The unrest seen in Iran since the June 12 presidential election has caused strong stagnation in the local billet market, just as in the other markets for long and flat steel products in the country. With economic activities in the country affected by the current political situation, demand levels in the Iranian steel markets have weakened, though some rising movements had been observed before the presidential election.
 
Khouzestan Steel, one of Iran's main state-owned semi-finished steel producers, is currently offering 150 x 150 mm billet at about $430-440/mt in the local market. Meanwhile, most Iranian re-rollers prefer to buy CIS origin ready stock billet as its price is generally lower than Khouzestan Steel's price. On June 21, a batch of ready stock Russian billet (Mechel production) was offered via the Iran Mercantile Exchange (IME) at about $465/mt; however, it failed to find a buyer with potential customers bidding a maximum of just $425/mt.
 
The privately-owned billet producers which have come on stream in the last few years in Iran are suffering from the weak demand and the low prices of billet in the local market. Most of them have cut back their billet production and some of them have even halted production operations, due to lack of profit margin and the possibility of incurring losses under the existing circumstances.
 
Iran's volume of semi-finished steel imports has declined in recent months due to the weak demand levels in the stagnant domestic market; with ready stock billet prices often lower than offers for fresh CIS production, local traders are not so interested in importing billet. Iran imported about 3.8 million mt of semi-finished steel (mainly billet) in the last Iranian year (21.03.2008-20.03.2009) while it imported more than 4.1 million mt in the year before, according to the Iranian customs authorities.