Decoupling of Commodity Prices from the Dollar

The decoupling of commodity prices from the dollar has effectively been initiated by the government over the past two weeks and has already been implemented in the steel sector.

As shown in the figure, the exchange rate used in the Commodity Exchange for Khuzestan Steel Billet (Fakhuz) was officially revised downward by 12%, decreasing the rate from 27,272 to 23,953 tomans per dollar.
This has led to a drop in billet prices from 11.1 million tomans to 9.76 million tomans, in order to satisfy downstream beneficiaries, including rebar producers.
Meanwhile, the Sana exchange rate has increased from 28,500 to 29,200 tomans, and global steel prices have been on the rise as well.

These actions are part of new regulations introduced by the Steel Market Regulation Committee of the Ministry of Industry, Mine, and Trade (IMT). However, this has raised concerns that, if continued, it could reduce sales and profitability of companies in the mining, metals, and petrochemical sectors.
It should be noted that setting a non-transparent exchange rate for commodities stimulates domestic demand while reducing exports, which in the medium term could lead to a rise in the Sana rate and harm various economic sectors.
Market participants should consider preventive measures given the risks associated with decoupling commodity prices from the dollar.