Posted on 31 May 2022
The price of Q235 150mm square billet in Tangshan in North China's Hebei province, the country's largest steel production hub, fell for the eighth week last week to hit a four-month low of Yuan 4,450/tonne ($665.4/t) EXW and including the 13% VAT as of May 27, down another Yuan 60/t from May 20, according to Mysteel's assessment. Ample supplies of the semis and weakening demand both led to the price decline, market sources said.
Also over May 20-26, the capacity utilization rate of the 126 blast furnaces in Tangshan under Mysteel's tracking rose for a fifth straight week to average 75.8%, gaining 0.61 percentage point from the previous week.
During the same period, the average production of billet among the 30 mills in Tangshan under Mysteel's coverage declined slightly by 1,600 tonnes/day on week to 40,200 t/d. Daily billet consumption among the city's 55 re-rollers regularly surveyed by Mysteel declined more significantly by 2,300 t/d on week to an average of 57,700 t/d over May 19-25.
"The imbalance between supply and demand continued to weigh on steel prices, so that end-users in the billet market maintained a wait-and-see attitude last week," a market analyst based in Tangshan said.
In response to the high billet stocks at yards and the feeble demand of re-rollers, some billet producers in Tangshan lowered their selling prices to facilitate shipments, aiming to bolster cashflow and cut their losses. This served to drag local billet prices down further, the analyst added.
Billet inventories across the 55 re-rollers decreased sharply during the survey week, reflecting their hesitant procurement of feed materials, with the total declining by 56,100 tonnes or 13.5% on week to 360,000 tonnes as of May 25. In contrast, Mysteel's survey showed that inventories of the semis across six commercial warehouses including two ports in Tangshan increased by 15,900 tonnes to 580,300 tonnes.
In addition to the excess supply, the weaker cost support also caused billet prices to soften, Mysteel Global noted. According to Mysteel's survey, the costs across ten integrated steel mills in Tangshan averaged Yuan 4,572/t including the 13% VAT as of May 27, down Yuan 92/t on week.
As of the same day, the average loss that the steel mills were suffering on billet sales shrank by Yuan 32/t from the previous week to Yuan 122/t including the 13% VAT.
Source:Mysteel Global
