China billet prices rise on cost support

Billet prices in Tangshan in North China's Hebei province posted moderate gains during August 17-23 on the back of elevated costs for inputs, with Mysteel assessing the price of Q235 150mm square billet in the city on August 23 higher by Yuan 50/tonne ($7.4/t) on week at Yuan 2,990/t EXW and including the 13% VAT.

Semi-finished steel prices began climbing from last Thursday through Saturday on market speculation that major local steelmakers would agree to pay Yuan 50-55/t more for their metallurgical coke, as demanded by independent coke producers, as reported.

Nonetheless, the uptick in billet prices is merely a passive response to mounting costs. Tangshan's mills are still incurring losses on billet sales at present, Mysteel Global noted.

As such, most steel mills in the city continued to focus on production of finished steel products last week, as sales of these incurred smaller losses than billets.

Accordingly, the daily tonnage of billets sold or exported in Tangshan and surrounding regions by the 21 local steel mills Mysteel monitors averaged 32,000 tonnes/day during August 14-20, edging up by 1.6% or 500 t/d on week.

In parallel, the volume of billets consumed by local re-rollers rose mildly on week as some had restarted rolling mills after maintenance. The daily consumption of billets among the 34 re-rollers under Mysteel's coverage averaged 42,600 t/d over August 13-19, climbing by 4.9% or 2,000 t/d on week.

Their pickup in consumption prompted re-rollers to continue to replenish billet stocks as needed. Consequently, the tonnage stored in the three commercial warehouses and two ports in Tangshan under Mysteel's tracking totaled 1.5 million tonnes as of August 20, down by 1.9% or 29,200 tonnes on week.

Not surprisingly, billet stocks held by the 34 re-rollers mounted further during the sample week, with the total tonnage reaching 796,000 tonnes as of August 19, higher by 5.5% or 41,500 tonnes on week.

As for this week, Tangshan billet prices are expected to maintain upward momentum, supported by strengthening cost support as well as recovering market fundamentals, a Mysteel analyst predicts.

On August 24, major domestic coke firms issued another price-rise demand to steelmakers, this time insisting on a larger Yuan 100-110/t hike to take effect from August 26, according to market sources.

On the other hand, demand for the semis is seen remaining largely steady on-week, but the resumption of rolling mills among some Tangshan steelmakers possibly leading to lower billet availability. This may provide some support to billet prices, the analyst suggested.

Source:Mysteel Global