Hormozgan Steel’s 40% Share of Slab Transactions on the Main Commodity Exchange

Despite electricity and gas limitations affecting the entire steel industry in Iran, including Hormozgan Steel Company, the company has achieved a significant share in slab transactions on the main floor of the Iran Mercantile Exchange during the first eight months of 2024. Hormozgan Steel captured over 40% of the total volume of contracts offered for the domestic market.

The volume of steel product offerings (slabs) in the commodity exchange indicates that Hormozgan Steel recorded the highest transaction volume in the main trading floor during this period, with 421,000 tons registered from March 26 to November 13, 2024. Following Hormozgan Steel were Khuzestan Steel Company, Mobarakeh Steel Company, and Jahan Ara Steel Company.

Between March and November 2024, the total volume of slab transactions on the main trading floor amounted to 1,045,100 tons, with Hormozgan Steel, under the trading symbol “Hormoz,” leading the market by accounting for nearly 40% of the contracts. In terms of transaction value, totaling 242.29 trillion rials, Hormozgan Steel’s share was close to 40%, amounting to 97.544 trillion rials.

Notably, the highest transaction volumes were recorded during a one-month period from September to October, during which Hormozgan Steel offered 210,000 tons of slabs to buyers on the commodity exchange.

This achievement is particularly noteworthy given the domestic market’s severe downturn caused by a lack of liquidity among steel producers and the banking sector’s strict policies on opening letters of credit for financing.

Another significant challenge for Iranian steelmakers, exacerbated by colder seasons, is the heightened energy restrictions compared to previous years. If no effective measures are taken to address these limitations, substantial production reductions across the steel supply chain are anticipated, leading to significant revenue and profitability losses for steelmakers.

The Need for Strategic Planning in the Steel Market
Given these challenges, establishing a clear plan for the steel market and adopting a defined strategy to stabilize the domestic market is essential. This approach mirrors measures taken by many industrial and steel-producing countries to counter the import of steel products, particularly from China. These nations focus on optimizing domestic production and supporting local manufacturers.

Key Factors Influencing the Steel Market
Exchange rate fluctuations remain one of the most significant external factors impacting Iran’s steel market. To better understand these effects and make informed managerial and policy decisions, modeling techniques can be employed. Modeling provides a structured framework for analyzing complex relationships among various variables, enabling more accurate predictions of the steel market’s future behavior.

Key variables in modeling include:

• Exchange rate
• Steel prices (billets, sheets, and other products)
• Production costs (raw materials, energy, labor)
• Domestic and international demand (for steel products)
• Government policies (monetary, fiscal, and industrial policies)
• Global factors (global steel prices, interest rates, and economic growth)

Modeling enables a deeper understanding of these mechanisms and provides insights into how exchange rates influence the steel market. This, in turn, enhances the ability to predict future market behaviors and make informed decisions. By evaluating market policies and leveraging modeling results, optimal decisions can be made regarding production, investment, and exports.

Supporting the Steel Industry
As one of the strategic industries in Iran, the steel sector holds a vital position in the national economy. Addressing the needs and demands of steel producers—such as ensuring adequate energy resources and imposing tariffs on steel imports—can be a significant step toward achieving the defined goals for Iran’s steel industry.

(By Maziyar Jafarieh)