Billet Prices in Tangshan in North China's Hebei Province Recovered During The Week of February 17-23

Billet prices in Tangshan in North China's Hebei province recovered during the week of February 17-23, in step with the climb in rebar futures prices boosted by positive market sentiment, according to Mysteel's weekly survey. 

As of February 23, for example, the price of Q235 150mm square billet in Tangshan, a bellwether of domestic steel-market sentiment, had moved up by Yuan 60/tonne ($8.3/t) on week to Yuan 3,090/t EXW and including the 13% VAT, Mysteel's assessment showed.

Meanwhile, the average cost incurred by the ten major mills in Tangshan under Mysteel's tracking eased by Yuan 24/t on week to Yuan 3,059/t including the VAT last week. The fall in costs and rise in billet prices saw the makers' average profit on billet sales reach Yuan 61/t on February 21, as against the Yuan 53/t loss a week ago.

Daily billet production among the 23 mills in Tangshan that Mysteel monitors declined by 1,500 tonnes/day on week to average 33,600 t/d over February 14-20, as a few mills adjusted production plans and switched from producing the semis to finished steel products.

In parallel, daily billet consumption among the 44 Tangshan re-rollers Mysteel monitors increased substantially by 27,800 t/d on week to hit a one-month high of 41,500 t/d on average over February 13-19, as most re-rollers had restarted normal operations during the survey week. This, together with their higher finished steel sales, led to a sharp rise in their demand for billets.

As of February 19, billet stocks held by the 44 re-rollers had mounted by 51,300 tonnes on week to reach a three-month high of 544,000 tonnes, showing their enthusiasm for purchasing the semis.

Moreover, total billet inventories across the four commercial warehouses and two ports in Tangshan that Mysteel checks had thinned by 67,700 tonnes on week to 1.2 million tonnes by February 20. Though some imported square billets had arrived at ports in Tangshan, the healthy appetite of re-rollers for the semis led to the overall reduction, sources said.

China's spot rebar prices rose for the second working day on February 27, while spot sales of long steel products including rebar fluctuated, falling back quickly after the prior day's short-lived surge, according to Mysteel's surveys. 

On Thursday, China's national price of HRB400E 20mm dia rebar under Mysteel's assessment headed north by Yuan 8/tonne ($1.1/t) on day to Yuan 3,450/t and including the 13% VAT.

The same day, the spot trading of long steel items also including Wire Rod and bar-in-coil among the 237 trading houses Mysteel tracks nationwide slumped by 43,050 tonnes/day or 29.9% on day to 101,172 t/d. The retreat in trading volume was attributed to cautious procurement of steel longs from some end-users, who were uncertain about market direction, sources said.

However, some market insiders noted that market sentiment has been lifted with the "Two Sessions" political meetings - concurrent annual meetings of the National Committee of the Chinese People's Political Consultative Conference and the National People's Congress - drawing near in early March. Meanwhile, steel demand continued to recover last week as mills' inventories fell, despite the rise in their production.

For example, the combined rebar output among the 137 Chinese steel mills Mysteel surveys over February 20-26 rose by 4.9% on week to reach a two-month high of 2.07 million tonnes, while rebar stocks at these surveyed mills decreased by 2.2% on week to 2.34 million tonnes by February 27.

In sync with the strengthening in spot rebar prices, the most-traded May rebar contract on the Shanghai Futures Exchange ticked up by Yuan 16/t from the previous day's settlement price when closing the daytime trading session at Yuan 3,329/t on Thursday.

The semis prices moved up too, as the Q235 150mm square billet price in Tangshan in North China's Hebei province gained by Yuan 10/t on day to Yuan 3,100/t EXW and including the VAT on Thursday, Mysteel's assessment showed. Both billet production and demand have increased, but the slowing sales of finished steel among re-rollers will likely cool their enthusiasm for buying the semis, according to a local source.

UPDATE: S. Korea starts AD probe into Chinese, Japanese HRC imports