Iran's Currency Depreciates Further, Will it Increase Exports?

The Iranian Rial (IRR), continue to depreciate owing to political unrest and ongoing sanctions. Currency depreciated by 2.75% in just one week to trade at IRR 43,240 per USD. IRR has depreciated by about 3.5% in last one month and 6.68 % in last two months.

Will it support exports?

Iran, one of the largest steel exporter in MENA region has exported 5.11 MnT of semi-finished and finished steel products during the first nine months of the current Persian year, registered a growth of 26% Y-o-Y, the Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) reported.

One of the major reason for increase in export in depreciation value of currency against USD, making it more profitable for exports. Exporters are getting better realization and making a handsome margin just because of currency depreciation.

As per market sources "No fresh export deal has happened yet, but it is expected that in coming days export market may go up. The last export deal happened was the export tender floated by ESCO"

Impact on domestic prices?

Iran domestic billet market price opened at USD 478/MT in week 53 (30/12/2017 till 04/01/2018).Prices further went down to USD 456/MT on 31/12/2017, prices reached to USD 447/MT towards the mid-week and towards the end of week, billet was traded at USD 450/MT.
As per market sources "The market is under pressure of currency depreciation, it is predicted that in coming days demand for billet might increase"

As per another market source "long products market is down in Iran currently and re- rollers prefer buying cheaper billet from small mills as their demand level is also limited. DRI supply level became limited during last week which may help billet price improve in coming days. Also some rumors about possible rise of long products was heard which would be helpful for billet price too. "

Iran domestic rebar was traded at around USD 544/MT during the first day of week 53, prices went down to USD 529/MT on Sunday and reached to USD 513/MT towards the mid-week. Rebar was traded at USD 518/MT towards the end of week. The difference between rebar and billet during week 53 was noted at around USD 65-73/MT.

Iran domestic ferrous scrap prices also witnessed a downfall during week 53. Scrap was traded at around USD 363/MT towards week beginning and reached USD 345/MT during mid-week. Prices further went down to USD 342/MT towards the end of week. Difference between scrap and billet during week 53 was around USD 99-115/MT.

Source: Planner
Prices in USD/MT
Inputs taken from Planner and IR Steel (IFNAA)

Bidding for Esfahan Steel Billet Export Tender Closed on 8 January'2018

Esfahan Steel Company (ESCO), one of the biggest steel exporter of Iran had invited tender for export of 30,000 MT billet for second half of Mar'18 delivery. The bidding for same was closed yesterday on 08-Jan'18.