WEEKLY: CN billet prices at new high as buying revives
Billet prices in North China’s Tangshan city, a key indicator of market price trends, are enjoying an unusually strong summer, thanks to keen buying from re-rollers, now back in business after observing government-mandated production restrictions.
Over the weekend the price of Q235 billet in Tangshan jumped by Yuan 80/tonne ($11.7/t) from last Friday to reach Yuan 3,990/t EXW including the 16% VAT as of Sunday, a trading day for the billet market. According to Mysteel’s database, this refreshes the most recent high and is close to last year’s peak of Yuan 4,010/t, set on December 12.
Market watchers say that behind the climb in the Tangshan billet price is the strong stance of producers who are responding to an increase in bids from re-rollers. More of the latter have resumed operations after the relaxation of the latest restrictions on steel mills in Tangshan over August 1-5.
Indeed, re-rollers in Tangshan have shown a willingness to buy semis after noting the better performance of longs in the finished steel market. Billet stocks among the 28 surveyed re-rollers rose by 5% or by 10,000 tonnes on-week increase in their inventories to 200,000 tonnes as of August 10.
Mysteel’s national average benchmark price for HRB 400 20mm dia rebar gained Yuan 17/tonne on day to Yuan 4,411/t including 16% VAT as of August 10, a new high since January 3. And the most-traded rebar contact on the Shanghai Futures Exchange, that for October delivery, last Friday closed at the week’s high at Yuan 4,200/tonne on August 10, up Yuan 13/t from the closing price the previous Friday.
Meanwhile, supplies of billet do seem to be declining. Mysteel’s regular weekly survey showed that the utilization rate of blast furnaces at the 49 steelmakers monitored in Tangshan continue to decrease, slowing by 0.31 percentage point on week to 65.18% as of August 10.
Altogether, 76 of the 164 blast furnaces at the surveyed mills were still idled, affecting 50,880 cu m in size or 1.05 million tonnes of actual molten iron output over August 4-10. Nevertheless, the productive capacity offline was the same as over the July 28 to August 3 period, according to Mysteel’s latest weekly survey.
The average margin that mills are earning on Tangshan billet sales has grown accordingly, gaining Yuan 18/t on week to Yuan 985/t including the 16% VAT as of last Friday, Mysteel’s latest survey showed. This was despite an increase of Yuan 42/t in production costs on week to around Yuan 2,925/t on average including the 16% VAT.
Written by Thea Feng, fengyx@mysteel.com
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