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 Feb. 28.
Most of the states neighboring the Islamic Republic, including 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 (March 21, 2019-Jan. 20), the country exported 2.98 million tons of finished steel products. From among this total, 2.27 million tons 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 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 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.
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 free currency market, $1 was trading at 157,500 rials on Feb. 28, compared with 144,500 rials on Feb. 21 and 134,800 rials on Feb. 1, according to free market exchange rate site Bonbast.com.
Under the circumstances, no export billet offers have been reported in the market this week, with market participants indicating a price of $390 per ton fob.
Fastmarkets’ weekly price assessment for steel billet, export and fob port Iran was $390-393 per ton on Feb. 26, narrowing upward by $5 per ton.
The reduced number of cargoes also resulted in lower freight rates. A source on the producers’ side said the cost of freight on Feb. 28 was $25 per ton.
“There are some vessels in the market looking for cargoes, but none is available. Mills have high domestic demand and traders are watching the situation,” an Iranian producer source said.
Some market participants believed that demand in Iran would remain buoyant for several more weeks until the new Iranian New Year (starting March 20).
Semi-finished steel exports from Iran totaled 5.82 million tons over the first 10 months of the current Iranian year, up by 47% year-on-year, according to ISPA.
Billet and bloom took the lion’s share of these exports at 4.09 million tons, rising by 63% year-on-year. Slab followed with 1.72 million tons, up by 18% year-on-year.
