WEEKLY: Tangshan billet softens further on weak sentiment
Local market sentiment in this major steel production hub turned to be gloomier than expected as both agents handling billets and re-roller buyers held off purchasing when the price of the semi kept slumping, a Tangshan-based market source said. “They were afraid of suffering losses both buying or storing billet if prices continued to tumble without bottoming,” she noted.
On the other hand, local re-rollers in Tangshan and across Hebei province have already started easing back on production or have even suspending operations completely as “their profits were severely squeezed by similar fast declines in finished product prices during the past week,” a Shanghai-based Mysteel analyst explained.
Last week, Mysteel’s latest weekly study of Tangshan’s billet market revealed that only 30 out of some 87 section mills in the city were still working, with the average operational rate sliding by 11.5 percentage points on week to just 34.48%.
Last week too, Mysteel’s national average benchmark price for HRB 400 20mm dia rebar, the most representative item in China’s steel market, was on a breakneck downhill slide, losing Yuan 109/t over the week to reach Yuan 4,531/t including 16% VAT as of November 16.
“Thanks to this, the re-rollers now are more willing to digest their existing billet stocks instead of replenishing, in case restocking adds further to their costs and squeezes their margins even more,” he added. Mysteel’s study showed that billet stocks held by 28 sample re-rollers contracted by 59,100 tonnes or 26% on week to 168,700 tonnes as of November 16.
At the same time, the lower-than-expected output restrictions for winter mandated by the Tangshan city government have also undermined the positive outlook many market players had towards prices. “Originally, market watchers had viewed the introduction of the restrictions as providing a firm base for steel prices but in fact, the lightness of the cuts became the last straw and led sentiment to collapse,” a second Tangshan-based industry source said.
Steelmakers, traders and end users in this corner of North China have been surprised that Tangshan steelmakers continue to observe normal operations when elsewhere in environmentally-sensitive regions of the country, steel companies have been forced to endure production cuts beginning November 15.
The utilization rate of blast furnaces in Tangshan last week declined by 1.4 percentage points over the week to 70.7%, while the figure was 0.3 percentage point higher than during the same week last month, and even 20.9 percentage points higher than last year, according to Mysteel’s database.
Written by Venus Wang, wangyi@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
DAILY: China steel prices, sales up on better sentiment
Jun 06, 2022 10:30
DAILY: China's rebar price reverses up, sales improve
May 30, 2022 10:30
DAILY: China's rebar price recovers, sales improve
May 23, 2022 10:30
WEEKLY: Tangshan billet price nears 2-month low
May 16, 2022 18:15
DAILY: China's rebar price down again, but sales improve
May 16, 2022 10:30