Iran billet export prices up; eased power curbs relieve mills slightly

Iran, one of the largest billets exporters in the world, is struggling with power outages as a result of which the billets exports market remained quiet this week too.

However, one deal was heard to have been concluded while the rest were scrapped as mills were worried on whether they would be able to meet the deliveries or not.

Esfahan Steel Company (ESCO), a leading steel exporter from Iran, recently sold 30,000 tonnes (t) of the material to China, as per sources. The company concluded the tender at $650-655/t on FoB basis for Sep'21 shipment.

SteelMint's assessment of Iran billets on 20 Jul'21 increased by around $33/t to $650-655/t FoB on the back of recent increases in Chinese import offers and futures contracts. Notably, the freight rate from Iran to China stands at around $50/t.

According to data maintained with SteelMint, the Chinese rebar futures contract for Oct'21 delivery closed today at RMB 5,648/t ($874/t), witnessing a sharp d-o-d hike of RMB 87/t ($13/t). On a weekly basis, the futures increased by RMB 102/t ($16/t).

"The Iranian billet export market is silent owing to the ongoing Eid holidays. The market is expected to resume trading from 24 Jul'21 onwards. Some relaxations have been provided for electricity usages to mills from late night to early morning hours, which has relieved mills slightly," said a participant from a leading steel company.

According to a report from Iran, restrictions on steel and cement companies on electricity consumption for production have been eased, which is considered a positive step towards gradually increasing production and stabilizing the market in the days to come.

As per the new eased norms, the steel industry can resume production on Mondays and Tuesdays from midnight till 8 am the next day operating at 50% of their total electricity consumption. However, for the balance period of the day and up to midnight, the mills can operate using only 10% of the power they actually require.

From Wednesday to Sunday, the mills can continue with their production at all hours of the day and night but only drawing 50% of the total power they require from the grid.

No trade reported on IME: Owing to the Eid holidays in Iran, limited trading activities were recorded this week. Earlier, acute electricity shortage affected the domestic market. On the Iran Mercantile Exchange (IME), no trade has happened this week either. However, around 89,600 t were traded at an average price of 1,32,462 Rial prior to last week.

Iran's apparent steel consumption declines 2% y-o-y in Q1 of Islamic year: The world's tenth-largest steel producer, Iran, has recorded a year-on-year decrease of 2% in its apparent steel consumption in the first three months of the Islamic year (21 Mar-21 Jun.

According to data furnished by the Association, apparent consumption of intermediate steel (billets, blooms and slabs) decreased by 1% to over 6.4 mn t. While total billet and bloom consumption was recorded at 3.82 mn t, the apparent consumption of steel slabs stood at 2.62 mn t. Billet and bloom consumption increased by 2%, while slab consumption decreased by 7%.