WEEKLY: Billet stocks at Tangshan re-rollers at record low
“We intend to keep billet inventories low, as many of us have a bleak outlook regarding demand,” a Tangshan-based re-roller producing rebar and wire rod told Mysteel. “Although we were doing okay in early December, I can clearly feel that pressures are accumulating as the end of this month approaches,” he said. The 2018 business year for most Chinese enterprises will end on December 31, Mysteel notes.
A parallel survey of a larger sample of 33 re-rollers published on December 14 found that their stocks had thinned by 11,300 tonnes on week to 174,700 tonnes as of December 13.
“Billet buying by re-rollers improved slightly last week, as their sales of finished steel recovered too,” a Tangshan-based industry source said on Monday. “But they (re-rollers) stayed very cautious (in stocking up the feeds) because many of them were already operating at breakeven point,” he observed.
As of December 14, Mysteel’s price for Q235 billet in Tangshan was Yuan 3,350/tonne ($485.5/t) EXW and including the 16% VAT, up Yuan 40/t on week, whereas the HRB 400 20mm dia rebar benchmark price in Beijing was Yuan 3,630/t, including the VAT. Both Tangshan and Beijing are located in Hebei province. The gap of Yuan 280/t between the semis and finished steel prices can hardly cover current rolling costs of around Yuan 400/t, Mysteel understands.
Billet stocks at eleven warehouses and in Jingtang and Caofeidian ports fell by 60,500 tonnes on week to 216,500 tonnes as of December 17, as a result of the increased buying, the survey showed.
Over the period December 7-13, the capacity utilization rate being observed among the 164 blast furnaces in operation in Tangshan increased 2 percentage points to 67.86%, despite the city government admonishing eleven local mills for not fully adopting production restraints and asking them to suspend their blast furnaces in accordance with the government’s plan, as Mysteel reported.
The curious increase in the utilization rate was mainly due to the fact that Shougang Jingtang United Iron & Steel Co, a major steel producer in Tangshan with a crude steel capacity of 9.7 million tonnes/year, restarted a 5,500 cu m blast furnace during the survey period after conducting week-long maintenance, with the rate largely increasing as a reult, Mysteel understands.
The mild week-on-week increase of Yuan 40/t in the billet price drove the margins of Tangshan billet producers up slightly, with their margins increasing by Yuan 28/t on week to Yuan 333/t as of December 14, Mysteel’s survey across ten sample mills showed.
Written by Olivia Zhang, zhangwd@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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