Iranian steel market participants suggest a revision in pricing mechanism at IME

On government's intervention in setting up the steel prices, the head of Tehran Chamber of Commerce, Industries, Mines and Agriculture (TCCIM), Mr. Masoud Khansari, wrote a letter to Mr. Mohammad Nahavandian (Vice President, Economic Affairs) asking for setting up a committee, comprising of TCCIM and Iranian Steel Producers Association (ISPA) to revise steel pricing guidelines.

• The key highlights of the letter are-
  As per recently announced regulations, steelmakers are obliged to sell their products at the IME 25% below world market prices. It has created high volatility in the steel market and artificial demand due to lower IME prices.
  
  

• While policy and decision-makers ostensibly take such measures to reduce the final offer of steel in the domestic market and support end consumers, in essence, such moves have had the opposite effect.
  
  
• Khansari warned that the new pricing mechanism could pour IRR 800 trillion of easy money into the pockets of dealers and the army of middle-men.
  
  
• He described the interventionist approach to the steel market as "a serious threat" to the production and export of the major commodities.
  
  
• He also pointed to the new regulations on the steel billet exports could undermine contractual obligations of steel companies to foreign buyers.
  
  
• "Steel billet accounts for 70% of steel export," he recalled. He further added that such an ill-advised policy is incompatible with the country's oft-mentioned trade policy that lays extra emphasis on non-oil exports and weans away from volatile international crude prices.
  
  

Source: Financial Tribune