Complete steel chain supply in IME for real price discovery

According to a report released by the World Steel Association (WSA), Iran’s crude steel production increased by 30 percent in 2019 while the average global growth in this sector stood at 3.5 percent.

Also, the WSA’s latest report indicates that the production of crude steel in Iran has increased 14.4 percent in July from the figure for the same month in the past year, while the average global production for this commodity has fallen 2.5 percent in the mentioned month.

Such reports show that how the Iranian steel industry has been constantly developing against all the pressures and obstacles created by outside forces like the U.S. sanctions and the coronavirus outbreak that has severely affected the performance of the world’s top producers.

The steel sector is being noticeably developed, and through implementing different projects in recent years a good market has been formed for the steel and steel products, but there is still some controversy over the prices, and some dispute between the upstream and downstream industries in this regard.

Offering the complete steel chain in Iran Mercantile Exchange (IME) is said to be the solution to this problem.

It is believed to put an end to all the challenges in terms of price, as this strategy will let the market discover the real price, considering the benefits of upstream and downstream units.

Also as stated by the IME Managing Director Hamed Soltaninejad, the IME lays the ground for transparent competition.

He says that if the complete chain of steel is offered in this exchange, transparency will dominate trades in the whole steel sector.

“Transparency should not be just for some sectors of the industry, while the whole industry including the downstream sector should enjoy transparent condition”, according to Soltaninejad.

Recognizing the necessity of offering the complete steel chain in IME, some measures are being taken to materialize this issue.

Last month, Mohammadreza Kalami, the secretary of Market Regulation Headquarters, announced that the Industry, Mining, and Trade Ministry has set up a joint committee with some other executive bodies to follow up on this issue and the required measures are being taken in the framework of four major pivots.

“Transparency is required in setting the price of steel, and when it is decided to offer steel in the IME, our top priority is definitely controlling the supply of the complete chain of the product”, the official stressed.

Also as announced on Monday by a member of the parliament’s Industries and Mines Committee, the parliament will soon draft a plan based on which the complete steel chain should be offered in the IME.

Allah-Verdi Dehqani said, “Given the nature of IME, which is transparency and real price discovery based on the supply and demand, through offering the complete steel chain in this exchange, not only is corruption and rent-seeking prevented, but the extra offered commodities can be exported under the appropriate condition.”

The MP said that the parliament’s plan is aimed at the supply of steel required in the domestic market through the commodity exchange and also supporting steel exports.