Iran’s billet market follows in tracks of global downtrend

The Iranian billet market has been influenced by the global decrease trend seen in recent weeks. Currently, 5SP/PS billet of 100 x 100 mm - 150 x 150 mm sizes are in a price range of about $1,130-1,150/mt on ex-stock Iranian northern ports basis for immediate delivery. However, there is no remarkable volume of transactions at this price range given that most buyers expect even lower prices. The latest offers for new CIS production 5SP/PS billets of 100 x 100 mm to 150 x 150 mm sizes have already reached a range of $1,130-1,160/mt on CFR Iranian northern ports basis with a delivery period of at least two months. 
 
Most billet imports to Iran from CIS countries take place via the Caspian Sea, a route which has the lowest freight rate of about $20-30/mt and the shortest transit time of about four to five days, from Russian and Kazakh ports in the north of the Caspian Sea to Iranian ports on the sea's southern coast. The sole disadvantage of importing via the Caspian Sea is that vessel capacity does not exceed 6,000-7,000 mt. Iranian traders who import billet from CIS countries via this route usually sell their material to end-users (rolling mills) ex-Iranian northern ports after receiving customs clearance. The traders in question are already reducing their prices of ex-stock billet every day in the hope of preventing more losses; however, the declining trend is so strong that most buyers are not interested in making bookings at existing prices due to their expectations of a further decrease. Iranian rolling mills, most of which are owned by the private sector are dependent on imports of billet, and naturally any fluctuation in billet prices in the global markets has a direct influence on their production costs and sales prices.
 
The Iranian authorities have decided to issue bank loans totaling about $2.2 million to assist the importation of billet by privately-owned rolling mills. The decision was made following several requests by the Iranian mills for financial support. Iranian rolling mills have a total installed rolling capacity of about 10 million mt per year, though their actual output does not exceed three to four million mt per year due to the shortage of billet. The mills in question do not have sufficient financial sources to import billet. However, the Iranian authorities' decision to allocate bank credits of $2.2 million should provide some relief for local rolling mills as it will enable them to import about two million mt of billet, or a little more, and thereby use a higher portion of their capacity and up their productivity.
 
Iran imported about four million mt of billet in the last Iranian year (21.03.2007-20.03.2008), and there is an expectation that a higher volume will be seen for the current year.