Tangshan billet prices may slide further in Dec

After weakening overall in November, carbon steel billet prices in Tangshan in North China's Hebei province are likely to weaken further this month, as the mismatch between supply and demand may expand in the traditional season of low steel consumption, Mysteel's latest monthly report warns.

Over November 1-30, prices for Q235 billet in Tangshan as assessed by Mysteel averaged Yuan 3,511/tonne ($503.5/t) EXW and including the 13% VAT, Yuan 113/t lower from the average price over October 8-31.

Although the tighter supply had led billet prices to rebound from the bottom in early November, rising numbers of COVID-19 cases in North China frequently disrupted production among local re-rollers, which suppressed billet demand and weighed on prices, according to the report.

Late last month, more steelmakers in Tangshan put their idled blast furnaces into production again, causing billet supplies to rebound, Mysteel's survey showed
Over November 25-December 1, daily billet output among the 30 steelmakers in Tangshan under Mysteel's tracking averaged 42,600 tonnes/day, rising 7,100 t/d or 20% from that over October 28-November 3.

With the commissioning of some relocated blast furnaces in the city, the sampled mills' daily billet output is expected to rise further to some 50,000 t/d this month, the report noted.

Meanwhile, authorities in North China have not officially required steelmakers to cut production to reduce air pollution as they usually do during winter, a break with tradition that means steelmakers can ramp up production and capitalize on improved margins this month, according to the report.

On the demand side, re-rollers in Tangshan remain cautious about procuring billet because their sales of finished steel were lukewarm last month, and many suspended production last month as workers were required to undertake temporary isolation to prevent the spread of the COVID-19 virus, as reported.

With temperatures dropping as winter approaches, China's steel market has entered the traditional season of low consumption among end-users, so demand for billet is expected to decline further, the report predicted.

Daily billet consumption among the 55 sampled re-rollers in Tangshan under Mysteel's coverage is likely to drop to an average of 45,000 t/d this month, some 4.8% lower than the average volume over November 4-30, according to Mysteel's assessment.
Under such circumstances, retailers' billet stocks are expected to keep accumulating in December and place further pressure on billet prices, the report noted.

As of December 1, total billet inventories across four commercial warehouses and two ports in Tangshan had increased for the third straight week to reach 475,400 tonnes, Mysteel's survey showed.

Written by Anthea Shi, shihui@mysteel.com

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