Posted on 16 Mar 2022
The price of billets in Tangshan, China's top billet supply base in North China, reversed down from a four-month high last week, according to Mysteel's latest weekly report, with slack demand caused by production restrictions given as the main reason.
According to Mysteel's assessment, the price of Q235 150mm square billet in Tangshan touched Yuan 4,810/tonne ($757.5/t) on March 7 - refreshing a four-month high - before retreating to Yuan 4,720/t as of last Friday, down Yuan 40/t on week. Both prices are in terms of EXW and including the 13% VAT.
Last week, buying of billet products was inactive, as Tangshan steel re-rollers, along with local integrated steel mills, were under production restrictions imposed by the Tangshan government since March 6 to reduce air pollution during the Winter Paralympics and the "Two Sessions" political meetings in Beijing, as Mysteel Global reported.
Last week, daily billet consumption among the 55 steel re-rollers in Tangshan surveyed by Mysteel averaged only 28,100 tonnes/day over March 3-9, down 35,300 t/d on week.
The restrictions were lifted on March 14, following the end of these major events, and both steelmakers and steel re-rollers in Tangshan have been gradually resuming operations, according to local market watchers.
However, mounting raw materials costs mean that the margins that Tangshan's billet suppliers and steel re-rollers are earning at the moment are very thin, which may affect their activeness in resuming operations, they noted.
Mysteel's survey across ten integrated mills in Tangshan showed that as of last Friday, their production costs had increased Yuan 149/t on week to Yuan 4,494/t, as against Yuan 40/t on-week decline in the billet price on week, with the result that their average gross profits shrank to only around Yuan 226/t. This "could barely cover their operational costs," one of the sources commented.
The poor buying of billets among steel re-rollers last week resulted in the billet inventories at 15 trading warehouses in Tangshan checked by Mysteel reversing up 25% on week to 423,100 tonnes as of March 10.
On the other hand, billet stocks at the 55 steel re-rollers continued to decline for the second week, falling by another 10.4% to 589,500 tonnes as of March 9, according to Mysteel's survey.
Source:Mysteel Global
