Posted on 08 Aug 2023
Under the pressure of rising supply, billet prices in Tangshan in North China's Hebei province during the week of July 31-August 6 lost some of the previous weeks' upward momentum, even though demand among re-rollers enjoyed a pick-up, market sources observed.
As of August 6, the Q235 billet price in Tangshan had lost Yuan 90/tonne ($12.5/t) on week to sit at Yuan 3,560/t EXW and including the 13% VAT, according to Mysteel's assessment, bringing an end to several weeks of gains.
Following the lifting of production curbs imposed in July by Tangshan city authorities to safeguard air quality, local steelmakers gradually resumed semis production, with daily billet output among the 30 mills under Mysteel's coverage averaging 46,500 tonnes/day over July 28-August 3, leaping by 11,500 t/d or 32.9% on week.
During the same period, the capacity utilization rate among the 89 blast furnaces in Tangshan under Mysteel's tracking had gained 0.28 percentage points on week to average 82.51%.
The contradiction between weakening billet prices and rising semis supply resulted in steelmakers' profit margins contracting, market sources noted. As of August 4, the average profit on billet sales earned by the ten integrated mills in Tangshan under Mysteel's tracking was Yuan 48/t, slumping by Yuan 111/t on week. On the other hand, the per tonne cost incurred by these mills when producing the semis averaged Yuan 3,532/t over July 27-August 2, Yuan 21/t higher on week.
In parallel, the week produced a recovery of sorts on the demand side, as most re-rollers in Tangshan had resumed work at the beginning of the month, sources remarked.
Over July 27-August 2, total billet consumption among the 55 re-rollers under Mysteel's tracking averaged 38,200 tonnes/day, recovering by 5,500 t/d or 16.8% on week. Total billet inventories held by these re-rollers also increased by 44,400 tonnes or 10.4% on week to 472,500 tonnes, Mysteel's survey showed.
During the survey period, the rise in both billet supply and consumption led semis stocks among traders to mount at a slower pace, with total billet inventories in the four commercial warehouses and two ports in Tangshan under Mysteel's monitoring rising by a smaller 1,300 tonnes or 0.2% on week to 716,200 tonnes as of August 3, compared with the prior week's rise of 12.8%.
Source:Mysteel Global
