Fleeing in front of the government by attacking the commodity exchange / Who is to blame for the high price of housing? – Tejarat News

According to Tejarat News, Mehrdad Bazarpash, the Minister of Roads and Urban Development, has recently identified the commodity exchange as the main culprit of the increase in housing prices. Based on these statements, which of course are confirmed by pro-government experts, the meeting of the Supreme Housing Council with the presence of the President is being held with the focus on the withdrawal of cement and steel from the commodity exchange.

steel industry; The driving engine of Iran’s economy

At the same time, the government is attacking the commodity exchange and steel industry to cover up its management deficiencies in the housing sector. The supply of steel products in the commodity exchange is one of the power arms of steelmakers to bring Iran’s steel industry to its current position in the region. Because according to the International Energy Agency, Iran is one of the main steel producers in the region.

How did the commodity exchange help the current position of Iran’s steel in the region? With the entry of steel into the commodity exchange, prices were determined by the supply and demand mechanism, and steel companies had a specific criterion for estimating the value of their final goods. This issue caused them to bring their production and sales to sustainable profitability by controlling costs. This issue also helped Iran’s economy a lot. Because a large part of the production of domestic wealth is on the shoulders of the steel industry.

But now, with the issue of cement and steel leaving the commodity exchange, listed companies will again face the problem of mandatory pricing and will not be able to compensate for the increase in their costs. It is enough to examine the automobile industry, where Bazarpash also held managerial positions.

Since 2008, when the car price was no longer determined by the Automobile Committee, this industry has been on the downward path of profitability, and finally Saipa in 2009 and Iran Khodro in 2009 suffered losses. A loss that has not been compensated after more than 10 years.

Sustainable production of cement depends on the presence in the commodity exchange

Cements are not excluded from this issue; A look at the cement market in the years before entering the commodity exchange, i.e. the year 1400, can outline the era of cement after leaving the commodity exchange. According to Hamid Farmani, Chairman of the Board of Directors of the Cement Industry Association, before this product entered the stock exchange, about 90% of the cement produced by the factories was bought by a limited number of people and then entered the open market after taking into account the profit.

In a way, it can be said that in the time before the commodity exchange, most of the profit from the sale of cement went to the pockets of the dealers and the only income of the cement dealers was a loss. But after the entry of cement into the commodity exchange, the financial statements of the cement companies reported profit making and the loss-making companies also came out of losses.

Also, according to the command, the price of cement has not only not increased but has decreased in the past year. This means that cement is also an innocent suspect for the high cost of housing and this issue is the only immediate way to reduce housing prices.

Failed experiences of prescriptive pricing

It does not take far to prove the ineffectiveness of mandated pricing to reduce the price of the final product (here housing). Examining the price of goods whose raw material is traded in the commodity exchange and its final product is traded in the open market helps to prove this issue.

Rubber is one of the basic goods that has been noticed nowadays due to its price jumps. Before this, the problem of the high price of tires was investigated in Tejaratnews, but now the topic of discussion is different.

If the production process of this product is studied, it is clear that styrene butadiene rubber is the most important raw material for rubber production. But as mentioned in the media, styrene butadiene rubber has not registered a price increase in the past year. On the other hand, the price of rubber in the open market records higher prices day by day.

This comparison of the price of the raw material and the final product, which are traded in two different markets, is an example for the price of housing and steel. Because if steel is considered as a material influencing the price of housing, it is priced in the commodity exchange and has no effect on the pricing of housing.

On the other hand, the calculations of construction activists show that about 30% of the cost of housing is related to steel and 2.5% is related to cement. With this account, if the government provides cement and steel for free to mass builders, the price of housing will decrease by only 32%.

But this issue is practically impossible; Because, first of all, steel and cement producers are companies whose shares are owned by the people. This means that the government has taken advantage of the profits of stock companies or in some way the profits of shareholders to solve the problem of high housing prices.

In the second step, it should be said that before steel and cement products were opened to the stock market, the price of these products was determined by order. But if we take a look at the steel market in those days, it shows that the situation was not as good as it should be. In addition, according to the head of the steelmakers’ association, in 1400, when steel entered the commodity exchange, the production of this product was revived.

What is the solution to control housing prices?

Finally, it must be said that the solution of steel and cement withdrawal from the stock market is not only beneficial to the people, but it will also end up harming them. Because on the one hand, the profits of companies whose shareholders are people will decrease, and on the other hand, the price of steel will find its way in the free market. with the difference that the price difference between the open market and the factory door will go to the dealers’ pockets.

In this way, isn’t it better for the government to shoulder its responsibility and instead of reaching into the pockets of people and industries, buy steel and cement at the daily price in the commodity exchange and then provide it to housing builders with subsidies?

Although a subsidized economy may not be to the taste of some, but in a dysfunctional economy where the government tries to dominate all its angles, this institution is expected to shoulder a duty and that is to provide resources to apply subsidies in the housing sector. , without having an eye on the income of parent industries.

The duty of the government to finance the construction of the national housing movement

The national housing movement plan, which was the big promise of the Ebrahim Raisi government, and now the cause of its failure is the supply of steel and cement in the commodity exchange, was proposed based on the Law of Housing Production Jump (approved by the Parliament in 1400). In the meantime, the third chapter of the housing production jump law is focused on providing building materials.

Article 13 of this plan has emphasized that the Ministry of Economic Affairs and Finance is obliged to provide pre-purchase and other means of covering the risk of buying construction materials (only steel and cement) in the Commodity Exchange in order to cover the risk of housing construction. In this way, this article clearly states that the supply route for cement and steel construction materials is the commodity exchange, and it is the Ministry of Economy that is obliged to facilitate this route. However, the supporters of rent are now thinking of bypassing this path and the law of jump in housing production.

Note (1) of Article 13 also obliges the Ministry of Roads, Urban Development, and Peace to prepare the regulations related to the provision of construction materials (steel and cement) for supportive housing projects (with the elimination of intermediaries) and submit them to the Cabinet for approval. In this note, it is emphasized on the elimination of middlemen, which is mandatory in a serious confrontation with the stakeholders of the economy.

In note (2) of this legal article, it is also emphasized that the Ministry of Economic Affairs and Finance is obliged to provide the possibility of purchasing construction materials from the “Exchange” for the builders of supportive housing with the introduction of the Ministry of Roads and Urban Development.

In this way, even based on the housing production jump law on which the 13th government has based its housing plan, the direction of the commodity exchange in providing construction materials has been emphasized. Based on this, we must ask whose interest has caused the Minister of Roads and Urban Development to announce the review of the withdrawal of steel and cement from the Commodity Exchange in the Supreme Housing Council, and this council agrees to convene a meeting with this focus?

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