Iranian buyers delay billet orders due to fall in finished product markets

CIS suppliers are currently offering billet at $680-690/mt CFR Iranian northern ports, unchanged from two weeks ago. However, there are no serious buyers in the Iranian market since local finished product prices (especially rebar) have been falling in the last few days.
Iranian traders and re-rollers are pessimistic regarding the prospects for billet prices in the coming days. Traders are worried that they will not be able to sell billet at a reasonable margin when ordered material arrives in Iran in a few months' time - there is a lead time of at least two to three months for orders placed at present.
 
The stability of CIS billet prices in the last few weeks has also influenced the market for ready stock billet in Iran. Nowadays local traders are offering ready stock billet at about $670-680/mt ex-stock Iranian northern ports, i.e., about $10-15/mt less than their price last week. The local traders who built up large stocks of billet at far lower prices a few months ago are not worried about any fall in prices as their margin is so large it can cover any fluctuation. However, traders who are going to place new orders are very cautious as any fluctuation of billet prices may cause them to incur heavy losses. This is why most prospective buyers have withdrawn from the market at present.
 
Iran has a potential demand of up to about 5 million mt per year of imported billet, which is mainly supplied by CIS countries. Naturally such a large market cannot be ignored by the CIS suppliers and it is likely that they will adopt their offers to the new market conditons sooner or later. The CIS suppliers may reduce their offers in the coming weeks if, on the one hand, global steel prices no longer provide support for billet prices, and, on the other hand, if Iranian buyers continue to stay away from the market in the coming days.