Billet prices in Tangshan, North China's Hebei province, eased for the second consecutive week during June 3-9, as the market sentiment turned cautious and re-rollers exhibited limited enthusiasm for purchasing the semis due to high stocks of finished steel.
As of June 9, the price of Q235 150mm square billet in Tangshan, according to Mysteel's assessment, had slipped by Yuan 60/tonne ($8.3/t) on a weekly basis to Yuan 3,410/t EXW, including the 13% VAT.
The price decline caused local steelmakers to suffer negative margins on billet sales once again. By June 7, the losses on billet sales incurred by the ten major integrated mills in Tangshan tracked by Mysteel averaged Yuan 8/t, in contrast to their average profit of Yuan 44/t the previous week.
Overall demand for billets weakened slightly during the May 30-June 5 survey week, as daily billet consumption among the 48 re-rollers in Tangshan monitored by Mysteel declined for the third consecutive week, falling by 5,600 tonnes/day on a weekly basis to an average of 32,500 t/d.
Meanwhile, billet stocks held by these surveyed re-rollers increased for the second week, rising by 15,800 tonnes on a weekly basis to 438,000 tonnes as of June 5. Some re-rollers had recently intensified billet procurement in response to improved finished steel sales, according to the survey.
On the supply side, a few local mills had idled blast furnaces for temporary maintenance, causing total billet production to edge down last week. Daily billet output among the 25 Tangshan steelmakers tracked by Mysteel decreased by 3,100 t/d on a weekly basis during May 31-June 6, averaging 40,000 t/d.
Furthermore, retailers' billet stocks increased further last week due to the continuing slow pace of procurement by re-rollers. The total inventories across the four commercial warehouses and two ports surveyed by Mysteel grew for the third consecutive week, swelling by 12,200 tonnes on a weekly basis to reach 873,200 tonnes as of June 6.
