Iran's domestic rebar market has resumed its downward course since the beginning of the current week, following the price surge last week which lasted just a few days. It is now around four months that rebar prices have been on an almost continuous declining trend in the Iranian market.
12-25 mm rebars are currently being transacted by local traders at $715- 725/mt ex-stock Tehran for immediate delivery, down from a range of $740-770/mt ex-stock Tehran the week before. The short-lived rising trend seen last week was not strong enough to boost prices up to a net increase on a week-on-week basis, though many optimistic traders thought it heralded the end of market stagnation and the advent of a new boom. The price increase of billet over the last two weeks also helped reinforce last week's rebar price increase. However, this week we have seen the rebar market collapse again in the absence of strong demand for rebars at the current time.
In recent years, Iran's privately-owned rolling mills registered rapid development thanks to the flourishing trends in both the local and global steel markets. The mills in question were planning to increase their capacities as well as expand their production chain, especially through the setting up of melt-shops to secure billet supplies - at present these mills generally suffer from billet shortages. Now, however, there are strong doubts over the development plans of private sector rolling mills in Iran, given the global economic crisis and its negative impact on the steel markets.
Most local rolling mills appear to be going through their worst days at present; they are selling their output - if they manage to find any buyers - at prices considerably lower than their cost price, sometimes even at half of their cost price. The sole consideration which encourages them to continue their production operations is the hope that when they start purchasing and consuming cheap billet they will see an end to their losses and begin to make a profit again.