Gov’t Seeks to Diversify IME Commodity Trade
EghtesadOnline: The Industries Ministry intends to increase commodities offered at the Iran Mercantile Exchange, a deputy minister said.
“The ministry has a vision to offer [more] goods via the IME,” Mohammad-Sadeq Mofateh was quoted as saying by the Securities and Exchange News Agency.
“Apart from diversifying goods, the conditions will be created for major buyers to enter the market,” Mofateh added.
Petrochemical, metal, mineral and agricultural products are already listed at major exchange. Cement was offered in the recent past and other key items, namely cars and real estate are expected to be added.
Pointing to rules governing the IME and goods traded in this market, he said prices cannot be determined arbitrarily in such a market.
“IME is a venue where demand and supply determine prices. We do not want to impose prices of, say cement or steel, by passing bylaws.”
The official concurred that setting price ceilings had proved to be ineffective in regulating prices. Successive governments in the past have been urged by economists to focus on policymaking and supervision and leave the rest, namely pricing, to the market.
In the past few years many listed companies failed to generate profit due largely to obligations to sell at (lower) prices set by the government. Capital market authorities say scrapping mandatory prices will have an early positive effect on the financial performance of such companies.
The issue has become a topic of hot debate among government officials, manufacturers and capital market authorities. It attracted the attention of the media and stock market investors late last year when the Industry Ministry set a price ceiling for steel offered via the IME.
The controversial decision spurred renewed sell-off in the bourse led by the plunge in giant base metal and mineral companies. The auto, cement, dairy and tire industries have had a similar fate.
Last December the Industry Ministry said steel products must be sold at the IME at prices equivalent to 70% in the Commonwealth of Independent States (CIS) markets.
Policy and decision makers argue that such measures help “reduce the final price of steel in the domestic market and support end consumers.”
But there is serious concern that such policies in essence have had the opposite effect and in the past filled the coffers of avaricious middlemen.
Highlight: Petrochemical, metal, mineral and agricultural products are already listed at major exchange. Cement was offered in the recent past and other key items, namely cars and real estate are expected to be added