Posted on 29 Mar 2022
The Q235 150mm square billet price in North China's Tangshan, the country's largest steel production city, strengthened to nearly a five-month high of Yuan 4,800/tonne ($753.5/t) EXW and including the 13% VAT as of March 25, as billet suppliers were bullish about demand going forward, even though at the moment, consumption is almost stagnated.
Most steel re-rollers in this corner of North China's Hebei province kept their plants closed last week – just as they had over the prior week – as many employees continued to be quarantined at home, market sources noted. The city has been in stringent lockdown against the COVID-19 resurgence since March 19, as reported.
Mysteel's survey across 55 steel re-rollers in Tangshan showed that their billet consumption averaged 38,100 tonnes/day over March 17-23, down 6,900 t/d on week, partially reflecting the lockdown's impact on local billet usage.
Though demand was low, Tangshan billet suppliers still raised their billet prices during the survey week, as they foresaw that the demand revival will be strong once the present virus spike is brought under control. Moreover, their own production has slowed too due to tightening raw materials supplies, as the city-wide lockdown is restricting truck transportation, according to a Shanghai-based analyst.
"Market expectations have changed," the analyst observed. "At the beginning, only demand was constrained (by the virus), but now supply has been slowed too," he said.
"The market is confident that steel demand will be strong after this temporary suspension, as the central government's series of efforts to boost economic growth will inevitably drive-up steel consumption," he said.
In the meantime, the continuing high costs of production have also been preventing billet suppliers from slashing prices, according to a Tangshan-based market watcher.
Indeed, as of March 25, the average cost of producing a tonne of billet among ten steel mills Mysteel surveys increased by another Yuan 10/t on week to Yuan 4,521/t including the VAT, according to the latest survey.
As for billet inventories, those at six Tangshan traders' warehouses and ports surveyed by Mysteel totaled 511,000 tonnes as of March 24, reversing up 119,000 tonnes on week.
The buildup was mainly due to the arrival of billets previously booked from abroad. But local billet suppliers were unable to transport the semis they produced to the warehouses due to the transportation restrictions, according to a second Tangshan based source, indicating that inventories may increase further when normal transportation resumes.
Meanwhile, billet stocks at the 55 steel re-rollers Mysteel charts in Tangshan declined for the fourth week, falling by another 84,300 tonnes to a four-month low at 439,800 tonnes as of March 23, according to Mysteel's survey.
Source:Mysteel Global
