Iranian steel market: I-beam price rises due to supply problems

The cold winter weather has caused some price reductions for most steel sections in the Iranian market. However, in recent weeks I-beam has seen a different trend, with prices at high levels of between $800 and $1,200 per ton. In Iran, I-beam is produced exclusively by two mills, Esfahan Steel Co. and Ahvaz Steel, and the production of these mills in general fails to meet market demand. Furthermore, whenever these two suppliers make any delay in the provision of some sizes or allocate a part of capacity for export, we then observe a price increase in the market. This occurs even when there is a general stagnation in the market caused by the cold weather. Recently, the two state-owned steel plants in question made some delays in supply, with the result that the I-beam prices increased even during the winter. The high prices of I-beam, especially for large sizes (200-300) at about $1,000-2,000 per ton, has caused many building contractors to use beams made of welded plates. This type of beam has a lower cost as hot rolled plate has a price of about $600-620 per ton, and in spite of the high welding surcharge, the price of welded beams doesn't exceed $700-750 per ton. On the other hand some unstandardized I-beams, produced by bending plates in press-shops, entered the Iranian market last summer. In order to encourage traders to import beams, the Iranian government decided to issue zero customs duty for I-beam & H-beam around five to six months ago. This policy resulted in some price reduction. However, I-beams imported by some traders from CIS countries couldn't be cleared from customs due to its low standard and low weight. Meanwhile, the Iranian private sector steel mills mostly produce round bar and other small sections. This is because the production of I & H-beams requires heavy rolling machinery which naturally needs very large investments. However, in spite of all decisions made by the Iranian government with a view to reducing the I-beam price, it nevertheless stands at a high level in the slow winter season. The price of I-beam can be expected to increase more and more in the coming spring if the government fails to ensure sufficient supply volumes in the near future.