Posted on 06 Jan 2022
The Tangshan price of Q235 150mm square billet, the weathervane of China's steel market, has stayed largely firm so far this week, after having tumbled by over Yuan 120/tonne ($18.8/t) during the last week of December. The price is being supported by an improvement in sales of both steel billet and finished steel, market sources say.
Located in North China's Hebei province, Tangshan is China's top steel production hub and its largest billet supply base. The recent improvement in billet sales is largely thanks to the stable operation of steel re-rollers, according to local sources.
"Last month, the re-rollers' operations were constantly subject to production bans, but this month, such restrictions seem to be less severe," a market source based in the city observed.
Tangshan's steel re-rollers - along with integrated steel mills and other industrial enterprises such as cement makers - are asked to suspend production whenever severe air-pollution alerts are issued by the city government, as reported.
Last month, steel re-rollers were only able to maintain normal operations for "four or five days", due to the frequent occurrence of air pollution, according to the source.
An 'orange' alert (second highest in severity) was issued on January 3, only two days after the previous one was lifted, Mysteel Global notes. This time, however, those steel re-rollers whose facilities "have passed the government's checks on environmental protection" are allowed to "postpone" taking restrictive measures, according to a government notice issued the same day.
A local steel re-roller confirmed to Mysteel Global on Wednesday that his firm's reheating furnaces and rolling mills are producing normally. "Our sales are also good," he said.
"We've been selling around 20,000 tonnes/day recently, while previously we were unable to sell a single tonne for some days," he added.
Improving sales of finished steel, in return, prompted some re-rollers to replenish billets as feedstock, the first Tangshan source pointed out.
In the last week of 2021, billet inventories in Tangshan did not change much because the environmental restrictions had affected billet supply, consumption and transportation, Mysteel's surveys showed.
As of December 30, billet stocks at 15 surveyed trading houses in Tangshan that Mysteel monitors had declined for the second week, down mildly by 25,800 tonnes on week to 515,900 tonnes.
On the other hand, inventories of the semis at the 55 steel re-rollers Mysteel canvasses in Tangshan, also thinned for the second week, declining by 2,500 tonnes on week to 575,000 tonnes as of December 29.
Source:Mysteel Global
