Tangshan billet quotes exceed the 5,000 yuan mark and many downstream steel mills suspend production due to billet shortages

Billet prices in Tangshan continued to rise sharply.

Ge Xin, deputy director of the Lange Iron and Steel Research Center, said that due to the Tangshan environmental protection restriction and production shutdown policy, the production of billet in Tangshan has declined, and the surrounding resources are shipped to Tangshan to earn the difference.

A new record high 

Institutional data shows that on April 2, the price of billet in Tangshan rose by 140 yuan/ton in a single day, with a daily increase of 3%, which set a new record in 13 years.

Affected by the increase in billet prices, on April 2, many steel processing companies in Tangshan raised their ex-factory prices for steel products, with a daily increase of between RMB 20/ton and RMB 150/ton.

A reporter from China Securities News learned that Tangshan's crude steel output in 2020 was 144 million tons, accounting for about 13.

The increase in Tangshan steel prices has spread to other regions.

In terms of futures, the closing price of the main contract for rebar on April 2 was 5,119 yuan/ton, an increase of 116 yuan; the closing price of the main contract for hot-rolled coil was 5556 yuan/ton, an increase of 89 yuan, and the prices all hit multi-year highs.

Ge Xin said that at present, the “look back” at the national level of steel capacity reduction and the research deployment of crude steel production reduction work has further strengthened the expectations of high steel output decline; the continuous rise of domestic futures and spot markets has also increased.

　　Steel mills are out of stock and stop production 

　　Affected by factors such as increased downstream demand, Tangshan billet inventories declined rapidly.
The monitoring data of the Lange Steel Cloud Business Platform showed that as of April 2, Tangshan's billet inventory was 200,000 tons, which was a decrease of 206,000 tons compared with the previous week, a weekly drop of 51%.
It has been down for three consecutive weeks, down 70% year-on-year.
 

　　A reporter from China Securities News learned that the continuous rise in billet prices in Tangshan has brought greater cost and purchase pressure to downstream strip and section steel rolling companies, and many steel mills have stopped production.
In addition, according to reports from many steel mills, due to the price difference of about 50 yuan/ton for billets inside and outside Tangshan, billet resources in the surrounding areas of Tangshan are constantly being mobilized, but the market is still in short supply.
 

　　The relevant person in charge of Tangshan Hongrun Iron and Steel Co.
, Ltd.
pointed out that the company's products are mainly rolled strip steel, and the price of billet rises, and the cost pressure of the enterprise is relatively high.
At present, the spot price of steel billet has reached about 5,100 yuan per ton.
In addition to the processing cost of about 200 yuan per ton, the profit margin of strip steel prices has been compressed to about 100 yuan per ton.
 

　　The person in charge said that in this kind of market, steel mills dare not take more goods.
They basically buy goods on demand and produce according to orders on the premise of ensuring profits.
Due to the large downstream demand, the order volume is still increasing, and steel prices are still bullish.
 

　　According to the relevant person in charge of Tangshan Zhengfeng Iron and Steel Co.
, Ltd.
, the company's products are mainly rolled section steel.
The current price increase of billet can be described as "step by step".
The section steel is basically the same, the profit margin is continuously compressed, and the supply is relatively tight.
.
Because Zhengfeng has a steel plant to make steel, the supply of billets can be guaranteed, the production and processing are still relatively normal, the profit is about 100 yuan per ton, the order can be guaranteed for 10-15 days, and the demand side is relatively strong.
At present, the Tangshan billet rolling mill is greatly affected.
Due to the inability to buy billets, many steel mills have been forced to suspend production, involving nearly 10 rolling lines.

Transfer from: China Securities Journal

　　[Copyright and Disclaimer] All copyrighted works belonging to this website must be authorized when reprinting and indicate the source "China Industrial Economic Information Network".
Offenders of this website will reserve the right to pursue relevant legal responsibilities.
Any reprint of articles and corporate publicity information only represents the author's personal views, and does not represent the views and positions of this website.
For copyright matters, please contact: 010-65363056.

Further reading