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| Higher billet demand from Iran supports Turkish market |
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Generally meeting its steel billet needs from Russia and Turkey, Iran has lately turned to Turkish origin steel billet, for which payment by letter of credit is possible. Besides, billet demand from small scale rolling mills and traders in Iran has increased lately.
However, the Iranian central bank is providing foreign currencies to importers at levels quite below the free market levels. Thus, the importance of trade via letter of credit emerges at this point. Although Turkey has been selling steel billet to Iran in smaller tonages for cash payments for a long time, the usage of letters of credit clears the way for larger volume bookings and provides the opportunity for Iranian importers to close these transactions at foreign currency exchange rates significantly below free market levels.
The increase in Iranian billet demand and the possibility of payments via letter of credit will help the Turkish steel billet market to maintain its strength. However, it is unclear how long Iran will stay in the market, as it is not beyond the bounds of possibility for it to disappear from the market suddenly.
(Source: steelorbis)
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