Vessel owners key to Iran sanctions, traders say

Posted on 14 January 2020

Source: Kallanish

The effect of the fresh sanctions imposed on Iranian steelmakers and certain foreign affiliated companies will be tangible if US authorities go after vessel owners, trade participants tell Kallanish.

Without this, those who have chosen to conduct trade with Iran in the past year despite the previous set of sanctions already being in place, will continue to do so. They will find the ways to avoid the US financial system, is a conclusion shared by the majority of traders who spoke to Kallanish.

The only measure that will be sufficient to halt Iranian steel export trade is if US authorities go after ship owners by blacklisting them with banks. This would make it more difficult for them to be booked for business currently and in the future, trading sources say. With an estimated monthly volume of 500,000 tonnes of Iranian billet and slab bookings currently being reviewed by the buyers, the market is awaiting the buyers' next move. If they start to cancel some or all of the approximately 300,000 tonnes of already-booked volumes and re-ordering new tonnages, there are not many alternative sources in the market. Turkish and possibly GCC billet may be available, traders suggest.

The CIS does not have much in terms of volumes, especially with short lead times, and is itself preparing for the new construction season boosting domestic billet intake, while regional supply is also tight. If Turkish mills manage to book scrap at current levels of around $300/t cfr for premium HMS 1&2 80:20, they could sell large quantities to southeast Asia and China at around $455-460/tonne cfr. However, "… it will take some hard negotiations as this price is still quite high", traders note.

The situation for slab could prove much more complex, however, as availability is already tight, and it will be "... nearly impossible" to replace already booked Iranian volumes, according to sources. Depending on the US' authorities' stance, if tonnages are cancelled, there will be some shortages in the importing regions, boosting hot rolled coil and plate price somewhat. It is worth remembering however that those tonnages are not huge, sources say, only around 200,000 tonnes/month. Ultimately there is a huge question mark as to whether any of these tonnages will be cancelled. 

Traders remind that the last round of sanctions’ implementation pushed billet prices up by $50/t, but add that the prices subsided just as quickly. "This week may be slow again as we watch what buyers opt to do," they conclude. 

«  Back

Copyright © 2016 SEASI Site. All Rights Reserved.