Posted on 07 Jun 2022
The price of Q235 150mm square billet in Tangshan, the country's top steel production hub in North China's Hebei Province, edged up from a four-month low last week to reach Yuan 4,500/tonne ($671.2/t) EXW and including the 13% VAT as of June 2, an increase of Yuan 50/t or 1.1% from May 27, according to Mysteel's assessment.
Also last Thursday, the ten integrated steel mills in Tangshan regularly surveyed by Mysteel gained an average profit of Yuan 21/t including the 13% VAT, the first positive margin the mills had enjoyed on their billet sales after five straight weeks of losses, the survey found. The steelmakers' average production cost by the same day had dropped further by Yuan 93/t or 2% from May 27 to Yuan 4,479/t including the 13% VAT.
The Tangshan billet price rebounded slightly at the end of last week, mainly because of the support the semi obtained from the strengthening contract prices of finished steel products such as rebar and coils in the futures market, a market watcher based in the city observed.
Another market source in Tangshan mentioned that local re-rollers had increased their procurement of billet to restock feed materials for production during China's Dragon Boat Festival holiday weekend over June 3-5, which bolstered billet prices to some extent. As a result, billet inventories across the 55 re-rollers in Tangshan under Mysteel's tracking rose markedly by 40,000 tonnes or 11.1% on week to 400,000 tonnes as of June 1.
Nonetheless, Mysteel assessed that daily billet consumption among these 55 re-rollers averaged 56,600 tonnes/day over May 26-June 1, a decrease of 1,100 t/d or 1.9% from the previous week, mainly due to the weak demand of end-users, as reported.
On the supply side of billet, the capacity utilization rate of the 126 blast furnaces tracked by Mysteel in the Tangshan region increased for the sixth week by another 0.81 percentage point from May 26 to average 76.6% as of June 2.
However, daily average billet sales volume of the city's 30 steel mills under Mysteel's coverage dipped by 1,900 t/d or 4.7% on week to 38,300 t/d over May 27-June 2, reflecting the fact that the mills were reluctant to ramp up the shipments of billets, because they could only gain thin profits on sales of semis, according to a local market analyst.
As of June 1, inventories of the semis across six commercial warehouses including two ports under Mysteel's assessment in Tangshan had increased by 65,000 tonnes or 9.2% on week to 645,300 tonnes, which was about 260,000 tonnes higher than the same period in the previous year. The accumulation of retail billet inventories may weigh on prices, the market analyst in Tangshan predicted.
Source:Mysteel Global
