Iran: Mills postpone tender bookings as billet export prices fall to three-month low

Iranian billet export prices witnessed a sharp drop following a deal concluded late last week. Declining global scrap prices, the COVID-19 upsurge followed by the lockdown restrictions in China and cheaper billet offers from Russia have dragged down billet export prices to a three-month low, SteelMint notes.

An Iranian mill concluded an export deal for 40,000 tonnes (t) of steel billet. The deal was concluded at around $610/t FOB for mid-June'22 shipment. SteelMint's latest assessment of Iran's billet (3SP) export prices stood at $610/t FOB on 17 May, down $50/t, w-o-w.

SteelMint had reported last week that Iranian mills had put over 130,000 t billet for export. According to market sources, majority of the tenders have been postponed till next week owing to higher price expectations. Meanwhile, another Iranian mill has floated a 20,000 t billet export tender today with the due date being 23 May. The shipment is scheduled for mid-June.

"Bids have fallen below $600/t FOB Iran levels for billets", said a local source.

Iran's government lowers export tariffs on billets, slabs

Iran's Director-General of the Mineral Industries has reduced export tariffs on steel billets and slabs by 2% and 5% respectively against the previously-announced 11% and 17%. Meanwhile, export tariffs on flat and long products have been completely removed.

Domestic billet, rebar prices fall sharply

Iran's domestic billet and rebar prices witnessed a sharp fall amid the ongoing lockdown restrictions in China and competitive offers from Russia, an Iran-based source informed SteelMint.

Domestic billet trades rise in IME

Domestic billet sales on the Iran Mercantile Exchange (IME) increased marginally by 3%. However, the average price was largely stable, w-o-w.

Around 128,400 t of billets were traded on IME in the week under review at an average sales price of 151,332 Rial. Last week, about 123,940 t of billets were traded at an average sales price of 150,035 Rial.

Meanwhile, Iran produced 2.89 million tonnes (mnt) of semi-finished steel in April 2022, up 3% as against the same month last year. Billet and bloom accounted for 1.67 mnt of the total semi-finished output, stable y-o-y, while slab production was up by 8% y-o-y to 1.22 mnt.

Outlook

Iranian mills are likely to turn active in exports backed by the recent reduction in export tariffs. However, with the problem of power supply re-emerging in Iran, the country's steel production is likely to remain restricted in the near future affecting billet export allocations.