The Iranian government has asked the country's steel mills to allocate more steel billet to the domestic market, where demand has increased significantly, informed sources in Tehran said Thursday.
The sources confirmed a report on the Iranian Steel Producers Association's website Wednesday that the request had been made, but said there was no immediate talk of banning billet exports.
Officials from major steel producers, the Iran Mercantile Exchange and the producers association had attended a meeting organized by the country's Minister of Industry, Mines and Trade, Mohammad Reza Nematzadeh, earlier this week to discuss the impact of billet price increases in the domestic market, the sources said.
"The country's steel industry has been instructed to allocate at least 50% of output to the domestic market through IME, and with a base price of an average of three international market indices," ISPA vice president Hamidreza Taherizadeh was quoted as saying by Chilanonline, the ISPA's website.
Exports will continue, although domestic demand will be a priority for billet producers, he added.
Taherizadeh said re-rollers were waiting for the billet to become available, and were also ready to import if the import duty on billet was removed and domestic producers were unable to cover their requirements.
The import duty on billet is currently 15%, and a 9% VAT is also payable.
The market reacted very quickly to the latest news. The Iran Mercantile Exchange said 5,000 mt of Khouzestan Steel Company billet was traded on the exchange Wednesday at Rials 19.8 million ($600/mt), down 3.4% from Monday.
It is not yet clear whether the billet import duty will be removed. Such a measure would take three to four weeks to be put into place, one market player in Tehran suggested.
He said it was more likely the current policy of seeking to have more domestic steel allocated to downstream industries would continue, with production also expected to be increased over the next few months.
