Posted on 16 Nov 2021
The Q235 150mm square billet price in Tangshan, the top steel producing city in North China's Hebei, continued to slide last week, falling by a total of Yuan 610/tonne ($95.6/t) on week to Yuan 4,290/t EXW and including the VAT as of November 12, according to Mysteel's assessment. This pleased billet buyers but the further price falls sent local billet producers into deeper losses.
Mysteel's weekly survey across ten integrated mills in Tangshan showed that their average loss when selling billets had yawned to Yuan 630/t as of November 12, from a comparatively tiny Yuan 117/t on November 5. Their average production costs had also declined last week but by a tiny Yuan 97/t.
"Steel mills are suffering steeper losses, but the situation may improve for them in the near term, as further declines will be seen in mills' production costs," a market watcher based in Tangshan reckoned.
According to her, a little time will be needed for the recent - and substantial - falls in raw material prices to be reflected in mills' actual production costs.
After the short-term emergency production ban imposed on Tangshan steel mills and steel re-rollers was lifted on November 7, both the supply and demand of billet recovered last week, Mysteel's survey showed.
Billet supply from 30 steel producers in Tangshan and nearby regions under the survey averaged 15,000 tonnes/day over November 5-11, reversing up by 6,000 t/d on week. Meanwhile, billet consumption across 55 steel re-rollers in Tangshan canvassed by Mysteel averaged 60,400 t/d over November 4-10, up more substantially by 41,400 t/d.
"Steel re-rollers are also facing challenges from high costs, as the billets they have stocked at their yards they had bought earlier when prices were higher. For now, the strength of their finished steel sales will decide the pace of their buying of billets," the Tangshan source said.
As of November 10, billet stocks at the 55 steel re-rollers under Mysteel's survey had increased for the second week by another 34,000 tonnes or 8.2% on week to 450,000 tonnes.
The billet stocks at 14 trading houses in Tangshan, in contrast, declined for the second week by 22,700 tonnes or 4.7% on week to 462,300 tonnes as of November 11, according to Mysteel's survey.
Source:Mysteel Global
