IME Announced 4 Reasons for Reduction of Mineral Prices in 2015

According to the report of public relations of IMIDRO, Iran Mercantile Exchange in its annual report announced that total value of metals and mineral products on spot market was 28 thousand and 232 billion rials meanwhile total volume of trading was 9 thousand and 883 kilo tonnes in 2015 which decreased 19 and 35 percent respectively compared with corresponding period of last year.

Moreover, the highest value and volume were in steel sector by 37 and 25 percent decrease compared with same period in 2014.

Also, the lowest value and volume of trading for metals and minerals in 2015 were in coke and concentrates by 45 and 23 percent decrease respectively compared with last year’s corresponding period.

The main reasons for decrease of volume and value of trading for metal and mineral products are as follows:

1. The global status China’s GDP growth rate in 2015 has been 6.9%.It is the lowest growth rate since 1991 and the variable is predicted to be less than this amount in 2016. In the current market conditions, the metal and mineral products market in various regions of the world, especially the steel has faced oversupply and this trend is expected to be continued.in this condition, the manufacturers have reduced their production volumes.

2. The rise in dollar value Over2015, the value of dollar compared to that of euro has increased. This rise in the value of reduces the demand for base metals. In addition, it is predicted that the value of dollar will continue to grow, because the Central Bank of European plans to adopt a new support policy.

3. The slowdown in the domestic market In 2015, due to the lack of government funds and consequently a considerable decrease in construction costs and liquidity problems in the economy, the recession in the country has led to a drop in demand for basic products (steel, petrochemicals and agriculture).

4. Increased production of iron ore in Brazil and Australia mines and a significant reduction in the base price. It has led to an excess in supplies and over 50% of reduction in strategic product prices in the international markets.