After rising firmly in previous weeks, billet prices in Tangshan in North China's Hebei province experienced sharp fluctuations and ended significantly lower on week during July 28-August 3, Mysteel's survey showed.
On August 3, the price of Q235 150mm square billet in Tangshan, a bellwether of domestic steel-market sentiment, was assessed by Mysteel at Yuan 3,030/tonne ($420.2/t) EXW and including the 13% VAT, lower by Yuan 80/t or 2.6% from a week earlier.
Billet prices were dragged lower by prices of finished steel products, as the bullish sentiment that previously buoyed domestic ferrous markets gradually receded last week, as reported.
Consequently, steelmakers in Tangshan saw their profit margins on billet sales shrink once again. The average profit earned by the ten major mills in the city under Mysteel's tracking was Yuan 217/t by August 1, much smaller than the Yuan 352/t recorded a week earlier.
Squeezing the mills' margins was also a steady rise in input costs, as the per-tonne cost incurred by the same ten sampled mills when producing semis averaged Yuan 2,843/t including the 13% VAT last week, higher by Yuan 35/t from the previous week, the survey results showed.
Nevertheless, the steelmakers were still enjoying healthy profits on billet sales, so they ramped up production further, Mysteel Global noted. During July 25-31 billet production among the 22 mills in Tangshan under Mysteel's coverage increased by 1,500 tonnes/day on week to average 42,000 t/d.
On the other hand, daily billet consumption among the 43 local re-rollers Mysteel monitors increased for the third straight week over July 24-30 to refresh a two-month high of 48,800 t/d on average, up by 1,900 t/d on week.
By July 30, billet stocks held by the same 43 re-rollers had decreased by 31,000 tonnes on week to 736,000 tonnes, ending a two-week rise, according to the survey.
In addition, total billet inventories piled in the four commercial warehouses and at the two ports in Tangshan under Mysteel's tracking continued mounting during the sample week to reach 1.22 million tonnes by July 31, higher by 55,200 tonnes from a week earlier.
Source:Mysteel Global
