Border closures restricting steel exports from Iran
The steel export trade from Iran has been hurt by neighboring countries closing their borders due to the appearance of coronavirus infection in the Middle Eastern country, Fastmarkets learnt on Friday February 28.
Most of the states that neighbor the Islamic republic - Iraq, Turkey, Pakistan, Afghanistan and Armenia - closed their land borders with Iran this week amid growing regional concerns about the spread of the infection.
Other countries in the region - including Saudi Arabia, Kuwait, Jordan, the United Arab Emirates, Oman and Georgia - have also imposed travel and immigration restrictions.
Iran’s remaining land-border neighbors, Turkmenistan and Azerbaijan, were reported to be intensifying border checks to combat the spread of the coronavirus.
Over the first 10 months of the current Iranian year - from March 21, 2019, to January 20, 2020 - the country exported 2.98 million tonnes of finished steel products. Among this total, 2.27 million tonnes were long steel products, mainly rebars and beams.
In total, finished steel exports from Iran increased by 25% year-on-year over the period, the Iranian Steel Producers Association (ISPA) said.
A large share of this volume was sold into the neighboring markets and delivered by land, so the closure of borders was expected to have a significant effect on the steel export trade from Iran.
“Thousands of trucks are stuck at all borders,” one source said. “Also, many Iranians are jammed inside Dubai airport. They cannot move because there are no flights to Iran.”
Iran has become the epicenter of the outbreak in the Middle East, and has recorded the highest number of coronavirus fatalities outside China so far.
Iran’s health ministry has confirmed 106 additional cases of the coronavirus in the past 24 hours, bringing the total number of infections there to 245.
Iran’s death toll from Covid-19, the disease caused by the coronavirus, has also risen to 26, according to Kianoush Jahanpour, a spokesperson for Iran’s health ministry, quoted by broadcaster CNBC on Thursday.
Semi-finished steel exports from the country have also been reduced in recent weeks but this was largely due to increased demand within the country, which in turn was sparked by the weakening of the local currency against the US dollar.
“A continued loss in value [of the Iranian rial] means that local traders will keep buying to hedge against inflation,” one trader said.
In the official exchange markets, $1 was trading at 42,157 Iranian rials on February 28, unchanged week on week and month on month, according to exchange rate website Oanda.com.
Meanwhile, in the free currency market, $1 was trading at 157,500 rials on February 28, compared with 144,500 rials on February 21 and 134,800 rials on February 1, according to free market exchange rate site Bonbast.com.
In such conditions, no export billet offers have been reported in the market this week, with market participants indicating a workable price at $390 per tonne fob.
Fastmarkets’ weekly price assessment for steel billet, export, fob ports Iran, was $390-393 per tonne on February 26, narrowing upward by $5 per tonne.
The reduced number of cargoes also resulted in lower freight rates. A source on the producers’ side said that the cost of freight on February 28 was $25 per tonne.
“There are some vessels in the market looking for cargoes but none are available. Mills are enjoying the domestic demand and traders are watching the situation,” an Iranian producing source said.
Some market participants believed that demand in Iran would remain buoyant for several more weeks until the Persian new year, which starts on March 20.
Semi-finished steel exports from Iran totaled 5.82 million tons over the first ten months of the current Iranian year, up by 47% year on year, according to the ISPA.
Billet and bloom took the lion’s share of these exports at 4.09 million tonnes, rising by 63% year-on-year. Slab followed with 1.72 million tonnes, up by 18% year-on-year.