Posted on 03 Sep 2020
Billet consumption in Tangshan, China’s top steel producing city in North China’s Hebei province, essentially halved last week due to a production ban on steel re-rollers in Tangshan’s Fengrun district, according to local industry sources. The ban took effect from August 19 and the re-rollers will probably only start resuming operations from September 2, Mysteel Global was told.
Over the survey period of August 20-26, billet consumption among the 53 Tangshan steel re-rollers Mysteel monitors averaged 56,100 tonnes/day, down by a further 46,200 t/d or 45.2% on week, according to Mysteel’s latest survey. The 53 sampled enterprises cover both those in Fengrun and other districts and counties under Tangshan’s jurisdiction but steel re-rollers in Fengrun accounted for over 80% of the total.
The production ban for air pollution reduction, which was supposed to end by August 31, remained in force as of September 1 because weather patterns in Tangshan on September 1 were forecast to be not conducive to diffusing atmospheric pollution. The Tangshan government was intending to conduct an investigation into the stoppage of foundries and steel re-rollers, especially those dotted throughout the county and in villages, according to a government order on September 1.
The capacity utilization rate of the 35 section steel re-rollers Mysteel tracks fell by 50.7 percentage points on week to 26.2% as of August 26 in tandem with the slump in consumption, Mysteel’s latest survey showed. Most of the steel re-rollers in Tangshan produce section steel.
Over the past week, their observance of the production ban meant the re-rollers were inactive in buying billets, according to a Tangshan-based market watcher. Even those not under the ban only accepted their contracted volumes from billet suppliers or purchased in small quantities, just to meet near-term production needs, she said.
Over August 20-26, billet stocks at the 53 steel re-rollers totalled 420,100 tonnes, reversing up 59,100 tonnes or 16.4% on week. The stocks at 14 Tangshan steel traders under Mysteel’s survey, continued to increase for a twelfth week, rising by another 36,500 tonnes or 5.5% on week to 696,000 tonnes as of August 27 to reach a five-month high.
However, billet buying is expected to pick up soon, the Tangshan source predicted. “There is clear need for steel re-rollers to restock the semis” after their resumption, she explained.
Written by Olivia Zhang, zhangwd@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
Source:Mysteel Global
