Furniture Pipe and Profile Syndicate says

On the face of it, it is a challenge to supply hot steel sheet B for the pipe and profile industry. There is talk about Mobarakeh Steel as the mother industry, which the managers of the Pipe and Profile Syndicate claim to be underselling and overselling. Of course, some other lower-ranking activists of the same union do not confirm this accusation and believe that some of their union managers are in the name of production, and they are seeking their personal benefit in destroying this mother industry.

The directors of the syndicate also make other claims, that Mobarakeh Foulad and the Iran Commodity Exchange are circumventing the law, an accusation that has been investigated and rejected by the Competition Council.

What is the story of Syndica and Mubarake?

As the mother industry and the beginning of the production chain, Isfahan Mobarakeh Steel Company produces sheets required by the pipe and profile industry. An industry that is generally used in the middle stages of pipe production for many transfers, including gas, water, oil, etc. The problem is that the connection between the two is very deep. Now this is the only Isfahan Mobarake steel company that produces coil sheets in the range of 2 and 1.2 mm and above, which is required by the pipe and profile industry. The supply of products has been taking place in the stock exchange for many years, but in the meantime, other things happen. Some members of the Pipe and Profile Syndicate believe that the main supplier, Mobarakeh Steel, together with the Commodity Exchange, increases the prices in the stock market.

A claim that the Competition Council also rejects. On the other hand, Foulad Mubarakeh says that some of the directors of the syndicate are trying to gather evidence against this company regarding its monopoly and its inability to supply the domestic market. In the meantime, the suspicion that some of the activists of the Pipe and Profile Syndicate are importers has added to the complexity of the story. We went to the sides of the story to clear the dust and clarify the behind-the-scenes.

Criticism of tariff support

The head of the pipe and profile union announced the closure of 37 pipe and profile units in the last two years and said: “About 40-45% of the downstream industries have been closed and the rest are working at 30-70% capacity.”

Seyed Ali Abuei considers the origin of these events to be “the evasion of the law by Isfahan Mobarakeh Steel Company” and criticizes the protective tariffs.

When I ask if the protective tariff is undesirable, why is it used even in developed countries and in the most recent example, I point to Trump’s protective tariff on steel, he claims: Unfortunately, the tariff support of the ministry of “silence” has turned into supporting the high selling of blessed steel. has been That is, the same tariff rate is discounted and converted into the stock market price.

Three accusations of the syndicate against the commodity exchange

I ask him about the performance of the stock market. He says: There are several criticisms of the commodity exchange. First, the commodity exchange is seller-oriented, second, it is government-oriented, and third, its board of directors consists of suppliers. It means that the place of consumer and buyer is empty in it. From the first day, they were supposed to solve their own problems, not the problems of the society. Now we have reached this point where the stock market has almost become a means of serving high-priced goods.

Although this dispute has three sides (Commodity Exchange, Mubarakeh Steel and Pipe and Profile Syndicate), the head of Pipe and Profile Syndicate points all the finger of accusation only towards the other two sides of the story: there is a law in the commodity exchange according to which if in If we have a surplus on the day of the product release, the seller has the right to offer it as matching until the next trading period in the exchange room. For example, Foulad Mobarake supplies 30,000 tons despite the demand of 120,000 tons. And the next week, 60,000 to 100,000 tons of matching will be traded in the exchange room.

Criticism of steel exports

According to Abuyi, the production capacity of the members of the Pipe and Profile Syndicate was 18 million tons per month. Of course, the figure announced by him is debatable from the point of view of some experts, because they know that this statistic is extracted from the license, that not all of it is operational, but part of it is formed due to the price rent in the market of raw materials. Based on this, I ask him about the actual amount of sheet shortage in the domestic market. He says: In the last two years, we have imported raw materials every year. Even now, we believe that 100% of Mobarake steel export is for domestic needs.

I am asking; Does this mean that due to the export of Mobarakeh steel, you brought less raw materials and started importing? Abuyi answers: Yes. In the situation where we are embargoed and the conditions of currency transfer, it will waste four to five percent of our resources and imports will bring noise and air pollution.

Contradiction; Supporting domestic production or eliminating import tariffs?

The head of the Pipe and Profile Syndicate speaks of the need to support domestic production, but in a contradictory position with this statement, he implicitly defends the zero tariff: the tariff has become a means of oppressing the domestic consumer. Do not consider the steel sector as a small sector. One of the progress indicators of countries is steel. From carriages to gas pipes, it has uses for pipes, steel and profiles. It is an expensive device. In my opinion, the Ministry of Industries has not been able to be an arbiter and the support has made a mistake and has gone out of neutrality.

About the distribution of sheets and profiles at the time of import, Abuyi says: Sheets and profiles are two different categories because we have 170 profile factories that compete with each other.

In the last five years, you can ask the officials of the Article One Commission and the Trade Development Organization. We can compete in production. However, Mobarakeh steel is constantly asking for this because of its high price, and now Mobarakeh sheet has become more expensive than the open market sheet. Abuei did not give a clear answer to the question of what will you do if we have a surplus of imported sheets in the country.

Four blessed questions from Syndicate

The vice president of sales and marketing of Isfahan Foulad Mobarakeh also raises a few questions before addressing the main issue: Mobarakeh Steel is a sheet supplier to many final producers. Why do other sectors and producers who are not related to the Pipe and Profile Syndicate have no problem with Mubarakeh? Second, why are the criticisms of Tuble and Profile Syndicate to Mubarakeh Steel not permanent and cyclical?

Third, if Mobarakeh Steel’s interaction with the Syndicate is not always appropriate, why have Syndicate members bought the most from Mobarakeh Steel in the last three years? And fourth, the fact that we deliver the paper to the respected members of the syndicate and they pay the money three months after receiving the paper, is this a proof of our positive interaction or a sign of not accompanying them?

After raising these questions, Mahmoud Akbari says: During the last three years (94 until now), the amount of delivery of Mubarakeh steel sheet in the domestic market increased from three million and 300 thousand tons in 2019 to five million and 740 thousand tons in 2019 and almost 70 We had a percentage growth in delivery. This growth has reduced the sheet import from four million tons in 2014 to two million tons, and most of the current imports are not within the range of dimensional and technical composition that can be produced in Mobarakeh, in fact, the majority of these two million tons of imported sheets are products of grades It is special that the Ministry of Oil imports, but in one sector, the import has been severely reduced, which is related to sheets under three millimeters; What the pipe and profile industry needs.

Behind the mask of production claims

The vice president of sales and marketing of Isfahan Mobarakeh Steel Company states that few importers have masked their production, stating: In the last two years, we have greatly reduced the import of steel sheet by increasing production. Why are some people upset? We have not attacked the production but have supported it. Why are a few people upset? In 1987, similar to this controversy was started by the same two or three members who are now members of the syndicate.

At that time, Mobarakeh Steel was not able to produce 1.5 million tons of sheets under three millimeters, and it supplied 20,000 tons per month to the market, and the rest was imported from abroad. They pressured you to give all our needs, in response it was announced that we do not have the capacity to produce all your needs. They said, get out of this car, we will import it ourselves. We are out of the circle of hot thin sheet production. As a result, between 1987 and 1994, four or five natural and legal persons who were related to each other imported sheets below three millimeters and distributed them in the domestic market with a large profit. They would price and sell as they wanted; Consumers also had to comply with their imposed prices.

He continues: This period passed and these friends left the syndicate and organization. The next board of directors of the syndicate told us that you, who are investing in the production of two-millimeter sheets, should gradually start producing and supplying two-millimeter sheets again. In 1993, it was agreed to start production again. We announced that we can supply 10, 20,000 tons per month for the time being, and with the implementation of our development plan, this number will increase in the future.

They said there is nothing wrong with you entering the market so that the monopoly of one person in the market of these sheets will be broken. We started this work, as soon as this work started, a movement was formed inside the syndicate, they said that the people who are the board of directors of the syndicate do not have the ability to manage.

Then they requested to hold an “extraordinary assembly” and before the legal time, they were removed from the board of directors and some others got into the board of directors and again they came with the same strategy that Mubarakeh should give us 100 thousand tons of 2 mm sheets. We also said we will give. We made a meeting that we will do this. In the meetings, they said that Mubarake is not capable of doing this, and we insisted that we are capable.

They said that you could not afford it in the past, we said, but today we have it. According to the meeting minutes of 3/25/1995, which was signed in the presence of the then Minister of Industry (Mr. Nematzadeh), it was decided that the needs of the market will be met by the domestic production capacity of Isfahan Mobarake Steel, Ahvaz Steel and Gilan Steel. It was decided that these three companies will meet the needs of sheets below three millimeters. There we signed the minutes of the meeting that Mobarake steel supply 1 million and 100 thousand tons, Ahvaz pipe rolling mill 400 thousand tons, Gilan 500 thousand tons (two million in total) to supply the market needs.

In 1995, one million and 316 thousand tons of sheets were delivered to the syndicate members. This work continued, and in the same year 1995, at the insistence of some members of the syndicate, we signed a new meeting minutes with the syndicate to supply and distribute 100 thousand tons of sheets per month, and since then, more than 100 thousand tons of sheets have been delivered to respected members every month. It was syndicated and the country completely lost the need to import this product.

Rejection of the syndicate’s claims in the Competition Council

Referring to the lawsuit that the union started after fulfilling its obligations, Akbari says: As soon as we answered the request for pipes and profiles, a complaint was filed against us by the union of pipe and profile producers to the competition council, and after investigation, The Competition Council rejected all cases.

They wrote 11 charges against Mubarakeh, which the Competition Council rejected 10 charges altogether. One issue remained, according to which the Syndicate said that Mobarakeh Steel focuses on distribution and sales in the market in the distribution of hot thin sheets, which are mainly used for pipes and profiles. They asked the Competition Council to break this concentration because its task is to prevent the creation of concentration. The Competition Council worked on this issue from 1995 to 1996.

Of course, our distribution was very bold because we had agreed to increase the sheet supply in this regard and we presented the meeting minutes to the competition council and said that the friends of the syndicate asked us and we accepted the request of the domestic producer.

If these are the representatives of the members, we have met their needs and were not looking for concentration in the market. We supply the sheet in the stock exchange according to the rules and regulations, 140 pipe and profile factories are also buyers of the sheet. All of them set rates based on market conditions, and our rate is based on the price of the dollar in Iran and is lower than the global rate.

Pre-designed map

We ask the Vice President of Sales and Marketing of Isfahan Mobarakeh Steel Company about the suspicion of a pre-designed plan, and he answers: If we were looking for monopoly, we would not give the product to the customer and receive the money three months after delivery.

Producers can produce and sell their goods and then pay Foolad Mubarakeh, so we support production.

Akbari continues: Finally, the competition council announced that Mubarake steel is not exclusive, but it has a significant amount of sales in the market, and therefore presented a formula that the base price of steel sheet in the area of thickness less than five millimeters (thin thickness) based on the price of two The previous week listed in Metal Bulletin in the CIS field should be calculated with the Sena exchange rate and presented to the stock exchange as the base price, and then the competition will be done at the base price.

This instruction was announced to Foulad Mubarakeh and the stock exchange and has been implemented since October 2016. Even though we didn’t believe in this at first, but we have to implement the established law anyway, we acted according to the same law. Sometimes we offered lower than the base price that was determined based on the formula of the competition council, that is, when the market was not welcoming and there was no traction, we reduced our price to the price of the buyers. Since then, they wrote every day that the supply is drop by drop.

We said that you yourself said to supply 100,000 tons per month, and when we agreed, you complained that so-and-so sells 100,000 tons of sheets every month and has a dominant role in the market. Now, why is the supply of 100,000 tons on the one hand a dropper and on the other hand is it highly focused on the market? What is behind the scenes?

What is behind the scenes?

Vice President of Sales and Marketing of Isfahan Mobarakeh Steel Company is sarcastic by saying a European proverb: in the words of a European person; The hardest thing in the world is to keep the masks that are on many faces. We said, what do you really want from us? Why are you changing your position? If you want goods, we will supply them. If we have an advantage, you buy. If we don’t have an advantage and the purchase is not welcomed, supply from outside as before.

These points show that we have targeted a trend that has been the activity of some people in the country and the interests of some have been endangered. We have not destroyed the interests of the members of the Pipe and Profile Syndicate and we are always trying to maintain a mutually beneficial relationship.

This issue is evident in the survey of our customers in 2016, the overall satisfaction level of respected Syndicate members has also increased by two percent compared to 2015.

Impact on imports and not producers

Akbari continues: We have supported the producer at all times and have hit the import that is produced in a foreign country. Why are some syndicate managers upset? Maybe there are a few people in the organization whose commercial spirit prevails over production and they are looking for other interests under the mask of the organization.

In 2016, we sold 1 million 359 thousand tons of sheets to the members of this organization, only slightly more than the supply of 1 million 316 thousand tons in 2015. Although we are ready to produce more, our production tonnage has been in accordance with the requests of the applicants and has been approximately the same in both years.

This means that the members of the syndicate do not need more than this amount of sheets, but the directors of the syndicate often claim that Mubarakeh does not give us sheets and provides a dropper.

The stock market trick of demand without buying

He pointed out a trick for the market turbulence and says: sometimes the demand is submitted to the stock exchange, but part of the demand providers are not buyers. Mobarake steel supplies 100,000 tons of sheets per month, but in practice they buy less tonnage. We had 100,000 tons of demand, we offered 48,000 tons in one symbol, but 30,000 tons were traded. What do these numbers mean?

Sometimes they provoke some people to create a false demand or due to the low base price, some people are encouraged to submit a request for purchase at a low price. In the previous year, in addition to what we have definitely sold, 568 thousand tons were offered for sale to the pipe and profile industry. provided and the sent invoices were not opened. This indicates market saturation.

400 billion tomans, avoiding paying import tariffs

Of course, the vice president of sales and marketing of Isfahan Mobarake steel company points to the suspicion of another violation: in 2014, they bought 700 thousand tons of sheets from us. In the same year, four million tons of foreign sheets entered our country. It is interesting to know that foreigners sanctioned Iran in many areas except steel sheet. Because we had four or five capable companies to meet this need inside our country and sanctions did not work.

But unfortunately, a group inside fueled the embargo in a different way and became the provider of their own and foreigners’ interests. A few Iranians along with a few foreigners targeted our country’s market. In 1994, the government imposed a tariff on the import of sheet metal, but did not increase the import tariff on mixed or quality steels.

As a result, two million tons of sheets were imported into the country under the disguise of mixed and qualitative steel tariffs. While this number was less than 150 thousand tons the year before that. Subsequent investigations showed that the sheets were imported and sold with the tariff of mixed and quality steel. In fact, the rights of the nation have been bypassed.

The question is, what happened in our economy when in 2014 or 2015, for example, 150,000 tons of mixed and quality steel imports suddenly reached two million tons with a vague jump?

Why is this import decreasing now? Today, when the consumption of our sheets has increased, why has their import decreased to about 100,000 tons per year? That year, about 350 to 400 billion tomans of customs tariff was not paid due to the evasion of imported ordinary sheets from the customs tariff and went into the importers’ pockets. No one followed up and the matter remained undecided.

Editor’s conclusion

It seems that the smoke of the triangle dispute between Syndica, Mubarake and the Commodity Exchange goes only to the eyes of industries. Customers who, according to the needs of the production line, have no choice but to comply with the ever-increasing prices. Therefore, by adopting a strong and innovative policy, Bahnia Sales Group has achieved favorable price stability for the consumer. You, dear reader, are invited to visit the office of this group and inform us of your opinions and future needs. This is very helpful in the proper production of consumer demand.