Posted on 23 Feb 2021
Tangshan Q235 150mm square billet price, the bellwether of China’s steel market sentiment especially in North China, soared to its over nine-year high of Yuan 4,140/tonne ($641/t) EXW and including the 13% VAT by February 19, or up Yuan 290/t in total from February 2, the last day Mysteel updated the price before the Chinese New Year (CNY) holiday over February 11-17.
Tangshan in North China’s Hebei province is a billet production and trading hub in China, and the local billet price surge was not only due to the high production costs and market optimism but also to do with the latest restrictions imposed by the city government on the afternoon of February 18 on local steel mills due to the poor air quality forecast.
“Starting February 20, our city’s air quality may deteriorate, and for some time, the quality readings may drop into serious pollution zone,” the city government explained in a notice on February 18, and it, therefore, ordered the local steelmakers to limit their sintering activities effective 1600 (Beijing time) on February 19.
To ascertain the adherence to the order, the city government specified the sintering facilities in each of the steel mills that need to be either halted or curbed in the notice, clarifying that further notice will be given as to when the restriction will be lifted.
An official from a Tangshan steel mill confirmed the impact by the latest restrictive measures.
“Our sintered ore stocks have been running low (due to the curbs), our crude steel output has reduced, and we have had to stop one of our four rolling lines,” he said.
The concern on lower billet supply because of the latest curbing, however, has propelled the local re-rollers to place more orders, abolishing their hesitation earlier on noting the possible disruption of production,” he added.
Such restrictions on steel mills and other local polluting industries such as cement have been quite commonplace in Tangshan whenever the air quality is forecast to be poor, but the low billet stocks at many local re-rollers and low finished steel stocks at the end-users have amplified the anxiety and eagerness for more bookings, a local market analyst analysed.
“End-users and traders had not stock up much (steel) before the 2021 CNY, as they were uncertain whether they would have been able to resume operations on time after the holiday, so now they need to rush,” he said.
Since the start of 2021, new COVID-19 cases have been reported in quite a few Chinese provinces including North China’s Hebei at first and then in Northeast China’s Jilin and Heilongjiang, and the situation was so concerning that Beijing strongly encouraged the Chinese not to travel back to their hometowns for the CNY but to celebrate where they are working and residing to prevent a new wave of COVID-19 outbreak.
The limited travel nationwide has shown effect, and by February 19, China had reported no new domestic cases for the fifth consecutive day, according to the release by China’s National Health Commission.
Source:Mysteel Global
