Posted on 27 Sep 2022
Mysteel's price assessment of Q235 square billet in Tangshan in North China's Hebei province had edged down for the second successive week by another Yuan 30/tonne ($4.2/t) on week to Yuan 3,630/t EXW and including the 13% VAT as of September 25.
Billet demand from end-users weakened further with the COVID-induced lockdown in Tangshan's Fengrun district over September 18-22, which dampened market sentiment and weighed on billet prices, Mysteel Global learned.
The lockdown limited transportation and population movements within the district where many re-rollers and warehouses are located, prompting these re-rollers to conduct maintenance stoppages, market sources reported.
Accordingly, the daily billet consumption of 55 re-rollers in Tangshan under Mysteel's coverage decreased by 7,600 tonnes/day or 13.5% on week to hit a seven-week low of 48,700 t/d over September 15-21.
Since logistics services around Fengrun district had been affected by the lockdown, it was hard for local re-rollers to restock billets, leading their total billet inventories to decrease by 40,000 tonnes or 9.6% on week to a six-week low of 376,000 tonnes as of September 21.
The lockdown also led total billet stocks among four commercial warehouses and two ports in Tangshan under Mysteel's tracking to reverse from the prior week's increase, down by 14,200 tonnes on week to 694,700 tonnes as of September 22.
However, on the supply side, daily billet output among 30 surveyed steelmakers in Tangshan had grown for the third week by another 5,800 t/d or 14.3% on week to an 18-month high of 46,500 t/d over September 16-22.
And the average capacity utilization rate of 126 blast furnaces in Tangshan that Mysteel monitors continued to inch up by 0.8 percentage point to 77.1%.
As a result, the supply-demand imbalance placed great pressure on billet prices and made steelmakers to suffer persistent losses on their billet selling, Mysteel's survey showed.
For example, the average loss on billet sales incurred by 10 integrated mills in Tangshan under Mysteel's tracking came in at Yuan 91/t as of September 23, though the average cost they bore on producing those semis reduced by Yuan 24/t on week to 3,714/t including the 13% VAT over September 15-21.
Source:Mysteel Global
