Posted on 25 Jul 2023
Billet prices in Tangshan in North China's Hebei province continued rising during July 17-23 supported by the strengthening of finished steel prices, Mysteel's survey showed. However, the semis demand among re-rollers weakened slightly.
As of July 23, the Q235 billet price in Tangshan had climbed for the second straight week by another Yuan 70/tonne ($9.7/t) on week to reach a three-month high of Yuan 3,620/t EXW and including the 13% VAT, according to Mysteel's assessment.
Billet prices gained some momentum from the rise of rebar futures last week, a market analyst based in Tangshan noted. By July 21, the most-traded rebar October contract on the Shanghai Futures Exchange closed at Yuan 3,823/t, higher by Yuan 75/t from the settlement price of July 14.
The price increase allowed billet makers to enjoy wider margins, as the average profit on billet sales earned by the 10 integrated mills in Tangshan under Mysteel's tracking was Yuan 154/t on July 21, while the costs on producing those semis incurred by these mills averaged Yuan 3,446/t during July 13-19, higher by Yuan 39/t on week.
Billet production decreased last week because some steel mills in Tangshan cut semis production and restarted their rolling lines, the analyst noted. Over July 14-19, daily billet output among the 30 mills under Mysteel's coverage totalled 48,000 tonnes/day, falling 3,100 t/d or 6.1% on week.
During the same period, the capacity utilization rate among the 89 blast furnaces in Tangshan under Mysteel's tracking averaged 89.43%, higher by 1.71 percentage points on week. (Mysteel's old survey on 126 Tangshan BFs is discontinued because it can no longer reflect the actual production in the city since many furnaces have been long idled or scrapped. The new survey covers 89 BFs among 25 steel mills in the city.)
Meanwhile, re-rollers in Tangshan reined in production due to their negative margins, and they also slowed procurement of feed materials, Mysteel Global learned.
Over July 13-19, daily billet consumption among the 55 re-rollers under Mysteel's survey averaged 63,500 t/d, lower by 1,600 t/d or 3.1% on week. As of July 19, billet inventories held by these re-rollers had edged up 1.6% on week to reach 464,700 tonnes.
Consequently, traders saw their semis stocks build up amid weaker demand, with the billet inventories among the four commercial warehouses and two ports in Tangshan rising 38,900 tonnes or 6.5% on week to 633,900 tonnes as of July 20, after falling continuously during the previous two weeks.
The billet demand may not rebound evidently this week as most re-rollers in Tangshan started to observe operational controls on Friday under the local authorities' request to improve the air quality in the city, as Mysteel Global reported.
Source:Mysteel Global
