Posted on 26 Oct 2022
Billet prices in Tangshan in North China's Hebei province continued to slide last week as market participants were pessimistic about steel demand, although tight availability of the semis still provided some support to prices, Mysteel Global learned from market sources.
As of October 21, Mysteel's assessment of the Q235 billet price in Tangshan had dropped to a near three-month low of Yuan 3,590/tonne ($493.1/t) EXW and including the 13% VAT, down Yuan 60/t from October 16. The price subsequently recovered over the weekend, however, and rose to Yuan 3,630/t on Monday, October 24.
China's prices of major ferrous commodities such as iron ore, rebar, and hot-rolled coil continued to soften in the futures market last week, which intensified the spot market gloom and made participants more cautious about billet trading, according to a market analyst in Tangshan.
The softening prices also kept squeezing the profit margins of billet makers, with the average loss on billet sales suffered by the ten integrated mills in Tangshan under Mysteel's coverage expanding further on week to reach Yuan 208/t as of October 21. As a minor compensation, the costs they incurred for producing those semis eased by Yuan 30/t on week to Yuan 3,818/t including the 13% VAT over October 13-19.
Steelmakers in Tangshan reduced their output of billet slightly in response to the losses. Daily billet output among the 30 steelmakers in Tangshan under Mysteel's survey averaged 31,100 tonnes/day over October 14-20, down 2,400 t/d on week.
Over the same period, the capacity utilization of the 126 blast furnaces in Tangshan Mysteel monitors edged up 0.7 percentage point on week to 75.1%.
On the demand side, billet consumption by the 55 Tangshan re-rollers surveyed by Mysteel averaged 55,300 t/d over October 13-19, slightly up by 400 t/d on week.
That billet supply declined while consumption edged up meant that the sampled 55 re-rollers saw the billet stocks at their yards decrease, falling by a large 47,500 tonnes or 11.5% on week to hit a two-month low of 365,000 tonnes as of October 19.
"The lower prices encouraged local re-rollers to continue building their billet inventories," the analyst in Tangshan said, noting that this led to the decline in retailers' billet stocks.
In the meantime, re-rollers in areas surrounding Hebei such as Tianjin and Shandong also took some billets from retail warehouses in Tangshan, she added.
Consequently, total billet inventories across four commercial warehouses and two ports in Tangshan under Mysteel's tracking plunged 94,300 tonnes or 15.5% on week to hit a five-month low of 515,800 tonnes as of October 20.
"Low inventories indicated that billet availability in Tangshan remained tight, which lent some support to billet prices," the analyst commented.
Source:Mysteel Global
