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Global trade war centers on steel: MSC chief tells parliamentary committee


The trade war raging on in the world centers on steel, and tariffs constitute a defensive weapon nations have at their disposal in this conflict; but in Iran such a weapon is employed minimally, Managing Director of Mobarakeh Steel Company (MSC) Dr. Bahram Sobhani told a parliamentary Special Committee to Support National Production.
Volume of steel sheets MSC offered in first quarter up 23 percent
A number of MPs, senior managers of major steelmakers, representatives of a host of bodies, including the Steel Association, the Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO), the Commodity Exchange, the Syndicate of Steel Pipe and Profile Manufacturers and the deputy industry minister for mines and mining industry attended the committee session.
At the meeting, the MSC chief said all around the world local prices are higher than global prices, but in Iran it's the other way round, adding some of the decisions made recently will curb steel exports rather than allow steel exports to bring in foreign revenues at a time when sanctions are in place.
Dr. Sobhani further said measures to require steelmakers to sell a certain amount of their products on the domestic market in the name of “commitment” and condition the green-light for exports on domestic supply are not compatible with any economic principle. “Mobarakeh Steel Company sells all of its products on the Commodity Exchange or through matching orders. It does not sell its products to middlemen.”    
The MSC managing director said the volume of steel sheets his company offered on the Commodity Exchange in the first quarter this year (March 21 – June 21, 2018) was up 23 percent over corresponding period last year.
Warehouses of steel buyers monitored
Hamid Reza Fooladgar, a deputy representing Isfahan in the Islamic Consultative Assembly, said a session of the Special Committee to Support National Production and Article 44 of the Constitution looked into the factors that sparked a steel price hike.
He said at the session which was attended by those involved in the steel industry the viewpoints of steel producers were heard.
The MP went on to say on top of local sales to meet domestic needs, steel producers can ship their products to markets overseas. “Now that a new foreign exchange policy package has been introduced, exporters and importers need to agree on a price for foreign currencies and the dollar that buys 4,200 tomans is no longer a basis for transactions.”
He said a plan to monitor the inventory of those who purchase steel products has been set in motion and should continue to prevent hoarding. Relevant officials should use websites that focus on behinyab.ir [the website the Ministry of Industries, Mines and Trade has launched to handle the procedures conducted by metal and mining industries and facilitate investment in them] or on added value systems to keep an eye on real demand on the part of producers to prevent unreal demand, because destructive liquidity may find its way into the steel industry.
In conclusion, he said the Commodity Exchange should slap a ban on resale of items purchased on the exchange. “In the question of sanctions, we need to focus on the problems that will likely arise in areas such as maritime transportation, insurance and exports.”
Price controls give rise to corruption  
Chairman of parliament's Economic Committee said in times of sanctions manufacturers should be helped to seriously focus on production and exports but in doing so every care should be taken to prevent rente-seeking and corruption.
According to parliament's news agency, Mohammad Reza Pour-Ebrahimi said detailed planning should be made to make sure in addition to meeting domestic needs, steelmakers are able to add to their average annual exports when sanctions are in place.
“Now that the value of foreign currencies has been corrected in the secondary market and manufacturers export part of their products, we should not forget the fact that price controls at home are acceptable only when the end-users benefit from the pricing regime,” he said, adding absence of benefits for end-users would be indicative of corruption and rente.
He said sales of steel products based on ordered prices will result in corruption and rente and interfere with exports; besides, it pushes up the expenses of production companies. “Basically, when sanctions are in place, there should be no barriers in the way of production and exports.”
Syndicate of Steel Pipe and Profile Manufacturers is overcharging customers
In reaction to allegations by the Syndicate of Steel Pipe and Profile Manufacturers against MCS, Nader Ghazipour, an MP, said in a recent meeting in parliament attended by industry ministry officials, the MSC managing director and representatives of the Syndicate of Steel Pipe and Profile Manufacturers and the Commodity Exchange, the question of steel sheets and the pipe and profile market was discussed.
The meeting concluded that the Syndicate of Steel Pipe and Profile Manufacturers is raking in extra profits and at the same time complaining about business conditions because some profile makers buy steel sheets on the Commodity Exchange at a low price and resell them to retailers and distributors at a higher price without providing them with invoices.
“On a day when I personally ordered profile at 7,000 tomans a kg, steel sheets were much cheaper at the Commodity Exchange,” he said. “We expect those who buy steel sheets and produce pipes and profiles to publicly announce the prices of their purchases and sales. I am among the individuals who have paid 7,000 tomans for per kg of profiles.”
The MP further said members of the Syndicate of Steel Pipe and Profile Manufacturers buy steel sheets from MSC and process them into pipes and profiles before selling them with a huge profit margin. “That means the syndicate is offering its products on a platform it shouldn’t and at the same time it is overcharging customers.”
In conclusion, he said the fuss the Syndicate of Steel Pipe and Profile Manufacturers is making is designed to cover its tracks and not allow its prices come to light. It comes as, according to state regulations, such practices are punishable by tough penalties.
 


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