China: Tangshan billet prices likely to fall in May

After billet prices in Tangshan in North China's Hebei province declined sharply last month, prices of the semis are likely to weaken further this month due to the mismatch between supply and demand, Mysteel predicts in its latest monthly report. Throughout April, production of the items remained persistently high while demand fluctuated. the report noted.

As of April 28, Mysteel's price assessment for Q235 billet in Tangshan stood at Yuan 3,490/tonne ($505.4/t) EXW and including the 13% VAT, lower by a large Yuan 410/t or 10.5% from March 31.

"Steelmakers had reduced their output of finished steel products such as rebar and hot-rolled coil as their losses on sales were expanding rapidly, and instead, they ramped up production of semis," the report stated.

As such, billet production in Tangshan climbed in April, with the daily output among the 30 local mills under Mysteel's survey rising 9.8% from the previous month to average 53,600 tonnes/day over March 31-April 27.

Meanwhile, billet consumption among re-rollers in the city gradually retreated last month in response to their shrinking margins, the report explained, with the rollers becoming more cautious about restocking the semis.

During the week of April 20-26, daily billet consumption among the 55 re-rollers in Tangshan under Mysteel's tracking dropped for a third consecutive week to average 44,800 t/d. The cumulative fall over the three weeks totalled 3.7%.

Consequently, retailers in Tangshan saw their billet stocks decline more slowly during April and start to accumulate at the end of the month, Mysteel's other survey showed.

As of May 4, total billet inventories across the four commercial warehouses and two ports under Mysteel's monitoring had rebounded by 89,200 tonnes on week to reach 892,200 tonnes after falling for six straight weeks.

Billet inventories may keep rising in May, the report warned, as the demand from re-rollers is likely to wane further due to their growing losses on the sales of finished steel, while the billet makers still seem loathed to curb production.

The total billet stocks among the sampled warehouses and ports are likely to mount further to 1.15-1.25 million tonnes this month, which will continue to exert pressure on semis prices, the report predicted.

Written by Anthea Shi, shihui@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.