Posted on 30 Jan 2023
Retailers in North China's Tangshan saw their billet stocks rise significantly during the official Chinese New Year (CNY) holiday over January 21-27, when steelmakers' billet production remained stable while re-rollers generally suspended operations for the holiday break, Mysteel's latest survey found.
The total billet inventories across four commercial warehouses and two ports in Tangshan Mysteel monitors had risen by 305,500 tonnes or 30.4% from January 19 to reach 1.3 million tonnes as of January 26, a new high since late March 2015. The reading was also 884,300 tonnes higher than the corresponding stocks post the 2022 CNY holiday, Mysteel's data showed.
Most steelmakers in Tangshan maintained normal production during the week-long holiday, with the daily billet output among 30 local mills under Mysteel's tracking standing at 50,100 tonnes/day over January 20-26, dipping only 1,700 t/d from the previous week.
During the same period, the average capacity utilization rate of the 126 local blast furnaces increased 0.66 percentage point on week to reach 75.75%, according to Mysteel's survey.
However, re-rollers' billet demand weakened sharply as many had halted production during the CNY holiday. The daily billet consumption in the 55 re-rollers in Tangshan under Mysteel's survey averaged 20,400 t/d over January 19-25, down by a large 12,600 t/d or 38% on week.
Since re-rollers barely procured any semis last week, the total billet stocks held by the sampled re-rollers dropped by 51,000 tonnes on week to 434,000 tonnes as of January 26.
On the other hand, steelmakers ceased offering prices for billets just before the CNY holiday started, so Mysteel's assessment of the Q235 billet price in Tangshan stood flat at Yuan 3,830/tonne ($564.6/t) including the 13% VAT over January 21-27.
As such, the 10 integrated mills in Tangshan under Mysteel's coverage still suffered an average loss of Yuan 27/t on billet selling as of January 27, while the average cost incurred by them eased Yuan 5/t on week to Yuan 3,857/t including the 13% VAT over January 19-25.
Billet prices are likely to strengthen this week on the post-holiday replenishment demand among re-rollers, but the high inventories of the semis will remain a pressure on the prices, according to a market analyst based in Tangshan.
Source:Mysteel Global
