Posted on 30 Mar 2021
The price of Q235 150mm square billet in Tangshan city, the top steel production base in North China’s Hebei province, refreshed its 12.5-year high last Friday after surging another Yuan 220/tonne ($33.6/t) on week to Yuan 4,710/t EXW and including the 13% VAT as of March 26, thanks to the further improvement in fundamentals.
Last week saw the supply gap widen further as production of billet continued to be curbed by the local government, just as demand for the semis had reached a peak, according to Mysteel’s weekly surveys.
Billet supply from the 29 integrated steel mills in Tangshan region regularly checked by Mysteel decreased further by 3,000 tonnes/day to only 21,000 t/d over March 19-25. This reflected the fact that beginning on March 20, most blast furnace steelmakers in Tangshan were required to begin observing production reductions of 30%-50%, as reported.
“Most mills in Tangshan have been complying with the imposed restrictions, as these days the pressure on polluters to protect the environment is quite consistent,” a market watcher based in the city observed.
Yet, others remained doubtful about whether such a degree of compliance would be maintained throughout the rest of this, given that the curbs are supposed to remain in place till December 30.
“Previously, the finished stocks held by (Tangshan) mills have been sufficient for them to continue business and so they responded obediently,” a steel trader based in Tangshan noted. “But recently, the stocks are depleting, so some steelmakers have started to feel edgy.”
While supply continued to be restricted last week, demand was robust. Mysteel’s other survey across 53 Tangshan steel re-rollers showed that their daily billet consumption reached 102,900 t/d, further enlarging the supply gap. The throughput volume among the re-rollers was higher by a huge 56,000 t/d on week, representing a peak when the re-rollers are producing in full swing.
With little surprise, billet stocks at 14 steel trading warehouses in Tangshan decreased for the fourth week last week, declining by another 253,900 tonnes or by a significant 35.3% on week to 465,700 tonnes as of March 25.
The billet inventories at the 53 steel re-rollers Mysteel samples also decreased for the third week, down 153,500 tonnes or 23.9% on week to 488,500 tonnes as of March 24, despite that some re-rollers had been buying from other regions to maintain their production, survey respondents noted.
Source:Mysteel Global
