Posted on 18 Oct 2022
Mysteel's assessment of Q235 billet price in Tangshan in North China's Hebei province failed to extend the prior week's incline, down by Yuan 60/tonne ($8.4/t) on week to Yuan 3,650/t EXW and including the 13% VAT as of October 16. Weaker market sentiment was mainly to blame for the price decline, Mysteel Global learned.
China's prices of major ferrous commodities including iron ore, rebar and hot-rolled coil all lost ground in the futures market last week, which dampened market sentiment and made participants become more cautious about spot trading as well, a market analyst in Tangshan observed.
However, Chinese steelmakers saw their production costs rise as spot prices of raw materials including coking coal and coke strengthened last week, squeezing their margins on billet sales, Mysteel Global noted.
For example, China's national composite price for coke under Mysteel's assessment gained Yuan 38.4/t from October 8 to reach Yuan 2,772.5/t including the 13% VAT as of October 14.
Consequently, the average cost for producing billet incurred by 10 integrated mills in Tangshan under Mysteel's tracking increased by Yuan 67/t on week to Yuan 3,848/t including the 13% VAT over October 8-12. Meanwhile, their average losses on selling those semis expanded by a steep Yuan 127/t on week to Yuan 196/t as of October 14.
The wider losses prompted steel mills to contain their production, which caused billet output to decline in Tangshan last week, according to the local analyst.
Mysteel's survey showed that the average capacity utilization rate of 126 sampled blast furnaces in Tangshan lost 2.4 percentage points on week to near a one-month low of 74.4% over October 7-13.
During the same period, daily billet output among 30 steelmakers in Tangshan under Mysteel's survey averaged 33,500 tonnes/day, down by 8,400 t/d or 20% from the previous week.
Meanwhile, the average billet consumption by 55 re-rollers in Tangshan under Mysteel's coverage increased by 5,400 t/d or 10.9% on week to 54,900 t/d over October 6-12.
"Some re-rollers increased their billet procurement after seeing the price slide," the analyst in Tangshan said, adding that local re-rollers also had certain replenishment demand to fulfill after they had consumed a large amount of raw material stocks during China's National Day holiday over October 1-7.
As a result, total billet inventories among these 55 re-rollers rose by 12,500 tonnes or 3.1% on week to 412,500 tonnes as of October 12.
Since more semis were shunted to re-rollers, billet stocks among retail warehouses had decreased accordingly, with total stocks across four commercial warehouses and two ports in Tangshan under Mysteel's tracking down by 51,800 tonnes on week to 610,100 tonnes as of October 13.
Source:Kallanish
