Low demand in domestic steel market and the slump in steel prices over the past one year have dramatically reduced the prices of scrap iron as a vital material for steel production.
While every kilogram of scrap iron was sold in domestic markets at 12,000 rials (41 cents based on the current official exchange rate) in June last year, it is now priced at 7,500 rials (25 cents), indicating a 38% decline in prices during the year, Foolad News reported.
Apart from the decline in prices, demand for scrap iron has also reduced.
In the past, about 10% of demand for scrap iron were supplied by the wrecking yards. During the last Iranian year (ended March 20, 2015), about 300 tons of iron scrap were produced by recycling more than 300,000 cars.
But the recent low demand for scrap iron has led to thousands of vehicles piling up in the scrapyards, where scrap iron is sold at about 6,600 rials (22 cents) per kilogram.
An unprecedented downswing in the housing and construction sector, the global decline in the prices of steel product and dumping policies adopted by a number of steel producing countries, including China and Russia, are among the main reasons behind low demand in the domestic steel market.
