Posted on 05 Apr 2021
China’s national average price of HRB400E 20mm rebar climbed above the psychological threshold of Yuan 5,000/tonne ($762.2/t) on April 2 to reach Yuan 5,015/t including the 13% VAT, again refreshing the high since September 2011, and market insiders reckon the upward ride has not ended yet.
Also on Friday, the price of billets grew at an even faster pace. The Q235 150mm square billet price in Tangshan, North China’s Hebei province, soared by Yuan 140/t on Friday – as against the Yuan 90/t on-day jump in the rebar price – to Yuan 4,960/t EXW and including the VAT.
“The market is really short of billet due to the ongoing production restrictions in Tangshan. If billet prices stay firm, it will be impossible for rebar prices to fall,” a steel analyst based in East China’s Shandong province said.
Based on Friday’s prices, the gap between semi-finished and finished steel has narrowed to only Yuan 55/t, while normally, the rolling cost is in the range of Yuan 250-400/t, Mysteel Global understands.
The continuous rises in domestic steel prices, especially since early March, were mainly thanks to two factors – expectations of a rise in inflation, and the “actual” implementation of curbs in Tangshan, China’s top steel producing city, according to Xu Xiangchun, a senior industry analyst based in Beijing.
Twenty-three of the 25 steel mills located in Tangshan have been implementing cuts in their operative steelmaking capacity of 30%-50% since March 20, and the restrictions are expected to last until the end of this year [see other article].
Xu believed that steel prices have further room to increase as demand this year is forecast to grow by 3% on year, while the central government still has its sights set on reducing crude steel output. The road will be hard because in January-February, crude steel jumped by 12.9% on year to 175 million tonnes, he noted.
Xu maintained that the rebar price in Shanghai could exceed Yuan 5,300/t, and if the crude steel output really declines on year, as Beijing plans, the price may exceed the all-time high reached in 2008 of Yuan 5,710/t. By Friday, the Shanghai rebar price stood at Yuan 5,010/t on April 2. All prices include the VAT.
Source:Mysteel Global
