TEHRAN (Iran News) – In a bid to bring transparency of prices to the markets of some major goods, Iran’s government is determined to offer such commodities through the commodity exchange.

Steel is one of those commodities being offered though Iran Mercantile Exchange (IME).

Iranian steel industry, which plays a significant role both in materializing the country’s motto of achieving self-reliance and in boosting the non-oil exports, has been in a development route in recent years.

Reports released by renowned international organizations such as World Steel Association (WSA) show that how the Iranian steel industry has been constantly developing against all the pressures and obstacles created by outside forces like the U.S. sanctions and the coronavirus outbreak that has severely affected the performance of the world’s top producers.

The steel sector is being noticeably developed, and through implementing different projects in recent years a good market has been formed for the steel and steel products, but there is still some controversy over the prices, and some dispute between the upstream and downstream industries in this regard.

Offering the complete steel chain in Iran Mercantile Exchange is said to be the solution to this problem.

It is believed to put an end to all the challenges in terms of price, as this strategy will let the market discover the real price, considering the benefits of upstream and downstream units.

Also as stated by the IME Managing Director Hamed Soltaninejad, the IME lays the ground for transparent competition.

“Transparency should not be just for some sectors of the industry, while the whole industry including the downstream sector should enjoy transparent condition”, according to Soltaninejad.

Cement is the other strategic product to be offered through commodity exchange.

Last week, the secretary of Iran’s Cement Industry Employers Association said that the supply of cement in the commodity exchange ensures the rights of producers and consumers.

Emphasizing the strategy and supportive role of the Ministry of Industry, Mining  and Trade in the entry of cement into the commodity exchange, Abdolreza Sheykhan described the requirement to offer this commodity only in the commodity exchange as a right decision that protects the rights of producers and consumers.

Some experts and also those active in the cement market say that ordinary pricing for cement has always challenged producers, so this product is offered on the commodity exchange.

Gholamreza Shariati, a member of the parliament’s development committee, is one of those supporting this idea.

He says cement is one of the basic commodities that should be offered in the commodity exchange and get rid of government pricing. Market surveillance should replace dictatorial interference in commodity price trends.

Achieving transparency in trades is made possible by the supply of cement on the stock exchange, he believes.

Cars, lands, and houses are the other items to be offered through stock exchange.

Last month, the deputy transport and urban development minister announced that the real estate stock exchange to trade lands and houses will be set up in Iran Mercantile Exchange in the second half of the current Iranian calendar year (September 22, 2021-March 20, 2022).

Mahmoud Mahmoudzadeh, the deputy minister for housing and construction affairs, said that there has been cooperation in this due between the ministry and IME since some months ago and some positive results have been already achieved in this regard.

The establishment of such exchange is in line with the government’s policy of providing housing units for the underprivileged, and many efforts have been already made to prepare the required infrastructure in this due.

The head of Tehran Stock Exchange (TSE) had previously announced that the exchange was due to be established in the middle of the previous Iranian calendar month (early July 2020).

Deputy Head of Iran Chamber of Commerce, Industries, Mines, and Agriculture (ICCIMA) says the establishment of the country’s real estate stock exchange is going to promote transparency in this market.

According to Hossein Selahvarzi, establishing this stock exchange is going to be an opportunity for making the transactions in the housing market more competitive and transparent, and will gain people’s trust for participation in mass construction projects.

And for the vehicles, the offering of cars in the commodity exchange is said to bring transparency in prices, as the price of cars in the free market has become significantly different from the factory price.

While offering the mentioned commodities through the stock exchange has its own supporters and opponents, the deputy industry, mining and trade minister announced on Sunday the ministry’s decision on massive offering of goods via this market.

“Our effort is to provide as much as possible the supply of important and effective products in people’s livelihoods in the commodity exchange, and so far a large part of the products have been offered in this market and the rest should be offered”, Mohammad-Sadeq Mofateh said, adding, different planning and coordination have been conducted in this regard.

He referred to the plan of the Ministry of Industry, Mining and Trade in the 13th government (current government) to cooperate with the commodity exchange and said, “Many times in various market regulation meetings, there has been talk of using the commodity exchange to offer products and discover commodity prices.”

Industry, mining and trade minister believes in using the commodity exchange to regulate the market for various products and the ministry has more emphasis on cooperating with the capital market in the current government than the previous government, the official noted.

The policy of the ministry is that prices in the commodity exchange cannot be set in an orderly manner, he said, adding that the economic actors will have forecasts of a commodity market and prices based on the amount of production and consumption of market participants.

According to Mofateh, the commodity exchange is a platform for the confrontation of supply and demand and the real discovery of price, and the price is not to be presented to the commodity exchange in the form of a notification or a circular.

Commodity exchange is a market in which the prices of commodities are determined only on the basis of supply and demand, he emphasized.

The deputy minister further pointed to the orderly pricing and the consequences of using it in the country’s economy and added, “We have had the experience of mandatory pricing in the country for several years, this measure not only never led to calm in the market, but also increased the problems in the country’s economy.”

It does not seem that there is anyone in the country who agrees with the orderly pricing, but the prices should be determined through the supply and demand mechanism, and the commodity exchange is the only tool for determining the exact and transparent price, the official concluded.

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TEHRAN (Iran News) – Iran Mercantile Exchange, IME, announced that 2.87 million tons of commodities, valued at over $3.39 billion, were traded in its domestic trading and export halls during January.

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On this trading floor, 41,402 MT of steel, 940 MT of copper, 1,780 MT of aluminum, 120 MT of molybdenum concentrates and 12 MT of precious metal concentrates were traded by customers.

The report declares that on domestic and export oil and petrochemical trading floors of IME, 212,485 MT of different commodities with the total value of $246 million were traded.

On this trading floor, 55,000 MT of VB feed stock, 50,675 MT of bitumen, 45,776 MT of polymer products, 24,860 MT of chemical products, 2,894 MT of insulation, 30,500 MT of lube cut oil as well as 2,900 MT of sulfur were traded.

Moreover, the agricultural trading floor witnessed trading of 15 kg of saffron strands.

Furthermore, 1,406 MT of commodities were traded on the side market of IME.

On June 24, during the meeting of IME shareholders, IME Managing Director Hamed Soltani-Nejad said that this exchange has prepared ten macro plans to improve its performance during the current Iranian calendar year (ends on March 19, 2020).

He mentioned development of underlying assets through existing instruments, development of financial instruments for commodity-backed securities, expansion of market size and depth, increasing cooperation with other organizations, and strengthening IME brand as some of the mentioned macro plans.

Soltani-Nejad has previously announced that IME accounted for 39 percent of the value of the total trades in the Iranian capital market during the past Iranian calendar year.

He put the value of IME trades at 1.78 quadrillion rials (about $42.3 billion) in the past year.

The value of trades at IME rose 52 percent in the past calendar year from its previous year.

Over 24.84 million tons of commodities valued at 884.3 trillion rials (about $21.05 billion) were traded at the physical market of IME, showing seven percent fall in the amount and 77 percent rise in the worth of trades year on year.

Applying new financial instruments in Iranian capital market was one of the achievements of the country’s exchange markets during the past year.

In this due, IME launched “option” in early March 2019 in an approach to diversify financing methods for agricultural products.

Option is a contract which gives the buyer (the owner or holder of the option) the right, but not the obligation, to buy or sell an underlying asset or instrument at a specified strike price prior to or on a specified date, depending on the form of the option.

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Also, the statistics showed a 9.2-percent growth in TEDPIX, the main index of TSE, which stood at 234,879 points, and a 12.6-percent rise in IFX, the main index of IFB, which stood at 2,978 points at the end of the third month.

Based on the already released reports and data, Iran’s exchange markets witnessed fruitful performances and results in the past Iranian calendar year 1397 (ended on March 20, 2019).

Applying new financial instruments in Iranian capital market was another achievements of the exchange markets during the past year, as TSE officially launched “futures” in mid-December 2018 for more risk management and IME launched “option” in early March 2019 in an approach to diversify financing methods for agricultural products.

This progressive trend is also continuing in the current year, as TSE Head Ali Sahraei announced on Saturday that TSE plans to launch a new market named “prime market” in which the price range for the shares increase.

He said that only companies with a minimum transparency score of 70 (out of 100) and floating stock of at least 25 percent would be accepted in the prime market.

Sahraei also said that there is no difference regarding rules governing market makers in this and other markets, adding that participation of market makers is mandatory in the prime market.

TSE main index TEDPIX has increased 56,220 points or 20.4 percent to 234,879 during the first quarter of the current Iranian calendar year (March 21-June 21).

As reported, some 258,055 billion securities worth 723.503 trillion rials (about $17.226 billion) were traded through 17.999 million deals at TSE during the three-month period.

Also, on June 24, during the meeting of IME shareholders, IME Managing Director Hamed Soltani-Nejad said that this exchange has prepared ten macro plans to improve its performance during the current Iranian calendar year.

He mentioned development of underlying assets through existing instruments, development of financial instruments for commodity-backed securities, expansion of market size and depth, increasing cooperation with other organizations, and strengthening IME brand as some of the mentioned macro plans.

Soltani-Nejad has previously announced that IME accounted for 39 percent of the value of the total trades in the Iranian capital market during the past Iranian calendar year.

He put the value of IME trades at 1.78 quadrillion rials (about $42.3 billion) in the past year.

The value of trades at IME rose 52 percent in the past calendar year from its previous year

Over 24.84 million tons of commodities valued at 884.3 trillion rials (about $21.05 billion) were traded at the physical market of IME, showing seven percent fall in the amount and 77 percent rise in the worth of trades year on year.

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Of the significant measures taken by IME to this end it could be referred to offering agriculture products at guaranteed price instead of the guaranteed purchase of these products by the government, which brought satisfaction for both farmers and the government.

In the framework of the guaranteed-purchase scheme, instead of paying the whole price to the farmers based on the guaranteed purchase, the government pays them just the difference between the base price and the price offered at the IME. In this way the financial burden on the government is reduced noticeably.

Guaranteed-price plan also brings more satisfaction for the farmers as they receive the payment sooner.  And the other advantages of this plan are creating transparency in the trades and also offering the products based on the specified standards in the IME which leads to promotion of their quality.

Also, in this plan prices are set fairly because the dealers are omitted from the chain of sales.

And now, IME has a new plan for more link between commodity and finical markets and it is establishment of some agriculture products funds, as announced by IME Managing Director Hamed Soltani-Nejad in an interview conducted by IRNA on Sunday.

Referring to the creation of a proper ground for the expansion of link between agricultural and financial markets, the official said that the plan for boosting trades of agriculture products at IME has been following up through new measures such as launching derivatives market and now is the time for agriculture products funds.

Establishment of such funds will be in the framework of IME’s macro plans in the current Iranian calendar year (began on March 21), as Soltani-Nejad has said on June 24 that this exchange has prepared ten macro plans to improve its performance during this year.

Making the remarks, during the meeting of IME shareholders, he mentioned development of underlying assets through existing instruments, development of financial instruments for commodity-backed securities, expansion of market size and depth, increasing cooperation with other organizations, and strengthening IME brand as some of the mentioned macro plans.

While IME has some prominent plans for this year, its performance has been also very positive in the past year.

Applying new financial instruments in Iranian capital market was one of the achievements of the country’s exchange markets during the past year.

In this due, IME launched “option” in early March 2019 in an approach to diversify financing methods for agricultural products.

Option is a contract which gives the buyer (the owner or holder of the option) the right, but not the obligation, to buy or sell an underlying asset or instrument at a specified strike price prior to or on a specified date, depending on the form of the option.

All these measures have led to diversity of agricultural products trades at the IME and also formation of a new chain of financial instruments at this market which will be more expanded by establishment of agricultural products funds.

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