Posted on 07 Apr 2022
The Tangshan Q235 150mm square billet price, the weathervane of Chinese steel market sentiment, hit a new high for the year so far of Yuan 4,860/tonne ($764.2/t) EXW and including the 13% VAT as of April 1, according to Mysteel's assessment, after climbing by another Yuan 60/t on week. The price had gained mainly on expectations of more active trading following the city's successful containment of the COVID-19 resurgence.
Tangshan city in North China's Hebei province is China's largest steel producing city. Beginning on March 29, city authorities gradually lifted lockdowns, district by district, after the reemergence of COVID-19 was brought under control, as Mysteel Global reported.
"The market is expecting both supply and demand to increase and billet sales to be more active, although at present, lockdowns in Fengrun and Fengnan districts – where most steel re-rollers are located – are still in place," a local steel analyst stated.
Over March 25-31, billet supplies from 30 integrated mills in Tangshan region totaled 31,500 tonnes/day, being unchanged on week.
On the other hand, over March 24-30 billet consumption among the 55 steel re-rollers Mysteel regularly surveys in Tangshan – the main consumers of locally-produced billets – averaged 13,000 t/d, down by a huge 25,100 t/d on week.
"April should be a busy month for the steel market, so once the pandemic is controlled, demand for both finished and semi-finished products will certainly jump," the source maintained.
Also supporting billet prices is the continuing high cost of billet production, she believed.
As of April 1, Mysteel's survey across ten integrated steel mills in Tangshan showed that their billet production costs had increased by another Yuan 60/t on week to Yuan 4,580/t including the VAT, meaning that the gross profits of these mills in selling the semis was only Yuan 279/t. "These earnings are meagre after deducting the operation cost and other expenses," according to her.
However, the mounting inventories of both billets and finished steel at steel re-rollers may slow the re-rollers' pace of buying the feedstock should they resume operations, she warned, which may limit the increase in billet prices in the meantime.
As of March 30, billet inventories at those 55 steel re-rollers totaled 485,800 tonnes, up 10.5% on week or 12.6% on year, according to Mysteel's survey.
Meanwhile, billet stocks at six Tangshan traders' warehouses and ports surveyed by Mysteel totaled 499,000 tonnes as of March 31, down 2.3% on week. But the volumes were more than double year-on-year, according to the survey data.
Source:Mysteel Global
