Iran's Ministry of Industries, Mining and Trade Bans Steel Price Increase at Mercantile Exchange

As per Tehran Chamber of Commerce, Industries, Mines and Agriculture, The Ministry of Industries, Mining and Trade of Iran has banned price increase for all steel products at Iran Mercantile Exchange up 21-Jun'18 over the command and orders of private producers and downstream users.

The ministry has also made it mandatory for big producers to increase their offerings at IME and refrain from selling the products outside the mercantile exchange.

Producers and users alike have been encouraged to share their ideas and criticisms on IME steel pricing and supply method with the ministry in a week's time.

The pricing move was the result of months of efforts by downstream users' associations such as Syndicate of Steel Pipe and Profile Manufacturers. The decision was made after the letter sent by Mr. Masoud Khansari Head of TCCIM to President Hassan Rouhani stating the "unreasonable" hikes in steel prices over producers' claim of a devaluing Rial.

"The steel industry has unfortunately boosted prices by 20% during the last two months over currency exchange rate fluctuations, while their production, which is locally fed and financed, is not at affected by the exchange rate," the TCCIM chief Said.

"As steel prices affect about 600 other commodity groups and can cause prices to grow across the spectrum of steel products, we hereby request that prices revert to levels before the currency fluctuations." TCCIM members did not get what they wanted, but they managed to retain the current prices for the time being.

The Rial was traded at about 49,000 against the US dollar in mid-February-the Rial's lowest against the greenback-after a near two-month bull run from 41,000.

Steelmakers took the maximum advantage in export. Exports for the 11th month of the Iranian year (Jan. 21-Feb. 19) increased by 111% Y-o-Y to 763,304 MT. The month before it also saw shipments grow in double digits.

What is Iran Mercantile Exchange (IME)?

Iran Mercantile Exchange was established on September 20, 2007 in accordance with article 95 of the new law of the Securities Market of the Islamic Republic of Iran and following the merger of the agricultural and metal exchanges of Tehran. The merger marked a new chapter in Iran capital market providing endless trading opportunities for the clients in and out of the country.

Services to the Market by IME

Various sectors of economy and national industry benefit from the exchange operation. The scope of the services is as under:

- Performing as the first market providing access to the initial offering of the listed commodities
- Price discovery and price making for the OTC, secondary markets and the end users
- Providing venue for government sales and procurement purchases
- Providing Trading platform and user interface
- Providing Clearing & Settlement services
- Risk management
- Technology services
- Training and education of the market participants

Inputs taken from Financial Tribune and IME