The price of Q235 150mm square billet in Tangshan, a pointer to Chinese steel market sentiment, reversed down by Yuan 100/tonne ($15.3/t) on a week to Yuan 4,940/t EXW and including the 13% VAT as of April 16, as billet supply has been easing and demand to shrink, Mysteel’s latest report showed.
Billet supply from local mills, from their rivals in other regions throughout China and from abroad, has increased and is expected to climb further in late April, the report findings show.
Last week, the capacity utilization rate of the 126 blast furnaces in Tangshan, the top steel-producing city in North China’s Hebei province, reversed up for the first time since February 25 to average 58.9% as of April 15, up 1.1% on the week, as some individual mills resumed operating their blast furnaces, the survey findings indicate.
“Those mills whose operations were totally suspended previously are allowed to resume part of the capacity, to be in line with the ongoing rate of restrictions,” a market source based in Tangshan explained.
Beginning March 20, some 23 Tangshan steel mills were requested to observe curbs on 30%-50% in their steelmaking capacity as an air-pollution control measure. Only two makers were exempted, thanks to their up-to-standard environmental protection performance, as reported.
Last week too, low-priced billets from regions outside Tangshan kept flooding into the city. Mysteel’s investigation showed that as of April 15, around 800,000 tonnes of billets had already arrived in Tangshan markets or were expected to arrive within this month. Some imported semis will arrive in May or June.
“Products are coming in from everywhere. I saw some from (Northeast China’s) Heilongjiang, (South China’s) Guangdong and even from areas very deep inland such as (Southwest China’s) Guizhou,” a second market watcher in Tangshan observed.
“When we add the volume of this inflow, the daily average supply of billets is around 55,200 tonnes/day, while demand has declined to below 90,000 t/d. A large supply gap is now turning to tight supply,” a Tangshan steel analyst said.
On the flip side, steel re-rollers in Tangshan have been scaling back their production, especially those rolling section steel, according to the second Tangshan source.
“The high billet costs have constantly squeezed the re-rollers out of several hundreds of Yuan in profits, so now they are generally on the edge of breakeven and are forced to throttle back their production,” he said.
Last week, inventories of billets held by traders at 14 warehouses Mysteel samples increased for the first time after six consecutive weeks of declines, rising by 37,400 tonnes or 18.5% on the week.
The billet stocks at 55 steel re-rollers surveyed by Mysteel continued to decline, falling for the sixth consecutive week and plunging by another 88,300 tonnes or 23.8% on the week to 283,400 tonnes. The sample size of the survey was enlarged to 55 since March 11, up from 53 previously and from 33 in March 2020.
— Written by Olivia Zhang, zhangwd@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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