Iranian mills raise billet export offers after a recent deal

Iranian billet export prices witnessed a steep rise in a recent deal for China. According to SteelMint sources, Chadormalu Mining and Industrial Company, one of the leading steel exporters of Iran, has concluded an export tender floated for 30,000 t billets. The company finalized the tender at $540-545/t, FoB Iran.

Besides this, a couple of billet tenders of Iran's leading steel exporters- Khouzestan Steel Company (KSC), and Esfahan Steel Company (ESCO) are under-progress. KSC has floated for 30,000 t billets (150*150mm, 3SP grade) for the end-Mar’21 shipment while ESCO's tender is for 20,000 t billets (130*130mm/150*150mm- buyers choice, 3SP grade).

“Iranian mills are now targeting $545-550/t FoB for billet export tenders which are under negotiations. Vessel freights from Iran to China have increased by $5-10 in the last couple of weeks”, highlighted a participant from a leading Iranian mill.

The rising domestic billet prices in China amid strong seasonal demand & production curbs, supported by increasing Chinese rebar futures are critical factors that will drive billet exports from Iran.

SteelMint's bi-weekly assessment for Iranian billets is currently at $540-545/t, FoB, up by $15-20 w-o-w.

Domestic billet demand continues to remain strong and stable- The domestic billet demand remained broadly stable this week. According to SteelMint sources, this week, around 96,000 t billets were traded against the offered quantity of 115,000 t at the Iranian Mercantile Exchange (IME). The base price was IRR 102,088/kg ($403/t), while the average traded price was 102,852/kg ($407/t).

The domestic billet demand has been strong for the past four weeks since the Iranian Government revised the base price to be the 75% function of the CIS prices. Earlier it was 80% of the CIS prices.

However, during conversations with market participants, we learned- “It is not the actual demand. Amid reasonable prices, the local traders are overstocking the billets, so that they (traders) can enjoy healthy margins in the future when prices will rise".

This report proved correct when we checked the finished long trading stats at the IME, which were not in parallel with billets. SteelMint also learned that re-rollers are making better realizations by exporting the finished steel to neighboring markets like Iraq.