WEEKLY: Tangshan billet price reaches year’s high
China’s Tangshan Q235 billet price, the barometer of Chinese steel market sentiment, hit the year’s high of Yuan 3,790/tonne ($557/t) EXW and including the 16% VAT on July 27, or up Yuan 70/t week on week mainly because of the consistent support from concerns on supply tightness, market sources commented.
The price, also a new high since December 22 2017, was achieved as the Tangshan government has launched another round of longer-term curbing on local steel mills’ various iron and steelmaking facilities including sintering, coking, shaft furnace and blast furnace over July 20- August 31 together with short-term emergency restrictions on these facilities since July 13.
All the efforts are to improve local air quality and for Tangshan to shake off the image as the country’s most polluted city, Mysteel understands.
Meanwhile, the margin in billet sales grew by Yuan 63/t on week to Yuan 916/t including the 16% VAT, partly as mills’ billet production cost edged up by Yuan 7/t on week to around Yuan 2,874/t on average including the 16% VAT as of last Friday.
Amid all the curtailing efforts, the capacity utilization rate of the 164 blast furnaces at the 49 surveyed mills in Tangshan, North China’s Hebei province, scored four-month low at 65.49% as of July 27, down 13.95 percent points on week, and 76 of these blast furnaces, or 50,250 cu m in total size, were on suspension over July 21-27.
Local molten iron output was estimated to be down by 1.04 million in total during the period, or much more than the 620,000 tonnes of affection over July 14-20 because of blast furnace stoppages.
Local steel mills, therefore, have been holding off from selling too much billet in the spot market prioritizing on self-sufficiency internally, which will be lending support to domestic billet price, Mysteel understands from steel mills and traders.
As of last Friday, billet supplies from 20 integrated steelmakers in Tangshan to mini mills had reduced to 46,000 tonnes/day on average over July 21-27, or down 10% or 5,300 t/d week on week, Mysteel’s latest survey in the aspect shows.
Tangshan billet price, however, may find it hard to climb up further amid lower buying enthusiasm, according to a Tangshan-based steel analyst.
Mini mills in Tangshan also have had little concern on billet shortage, as billet inventories at Tangshan’s eleven major steel warehouses and two ports rose by 74,000 tonnes or 22% on week to 405,000 tonnes as of July 27.
Written by Thea Feng, fengyx@mysteel.com
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