Billet prices in Tangshan in North China's Hebei province declined again during the week of April 6-12 after the previous week's gain, with Mysteel assessing the price of Q235 150mm square billet in the city at Yuan 2,970/tonne ($435/t) EXW including the 13% VAT on April 12, down by Yuan 10/t on week.
Billet supply in the local market remained largely steady this week, with only a few steelmakers in Tangshan adjusting their production plans to produce more finished steel items instead of billets throughout the survey week.
Specifically, the volume of billet sold or exported by the 21 steelmakers in Tangshan and the surrounding area regularly monitored by Mysteel dropped negligibly by 1.2% or 500 tonnes/day on week over April 3-9 at an average of 42,000 tonnes/day.
As for billet demand, most re-rollers had returned their production to normal levels after production curbs imposed to help reduce pollution were lifted on March 30, leading to higher billet consumption over the survey week.
Daily billet usage among the 34 local re-rollers under Mysteel's tracking averaged 45,400 t/d over April 2-8, soaring by 24.4% or 8,900 t/d on week.
Despite higher billet demand, retail billet inventories mounted further for a second consecutive week last week, Mysteel's survey result showed.
This was partly attributed to subdued demand for billet-rolled finished steel items, which in turn prompted local re-rollers to consume in-plant billet for production instead of procuring more. In addition, some billets for export, together with some imported slabs, are being stored at local ports temporarily, serving as another explanation for the higher inventories.
The tonnage piled in the three commercial warehouses and at the two ports in Tangshan that Mysteel tracks totaled 2.6 million tonnes as of April 9, rising by 3.6% or 89,200 tonnes on week after the one-week decline.
On the other hand, billet inventories held by the 34 local re-rollers under Mysteel's coverage dropped by 5.2% or 36,500 tonnes on week to sit at 671,000 tonnes as of April 8.
Tangshan billet prices are expected to see small declines this week, mainly driven by high retail inventory levels. As for billet market fundamentals, lackluster spot transactions for finished steel products would weigh on billet demand in the near term. On the other hand, supply is set to stay high amid healthy profit margins that the BF mills currently enjoy from producing hot metal, both of which are putting further pressure on billet inventories.
Additionally, production costs for making the semis have dropped slightly, translating into weakening support from the cost side and exerting downside pressure on billet prices.
Source:Mysteel Global
