SHANGHAI, Aug 17 (SMM) – Steel billet prices in Tangshan are set to continue to be supported by supply pressure from environmental restrictions on blast furnaces, SMM believes.
Billet prices have extended their increase and grew 30 yuan/mt on Friday August 17 to reach 4,040 yuan/mt ex-works at the time of publication, highest level since 2012.
Steel rolling mills in Tangshan resumed operations this week as some environmental cutbacks were lifted in early August. However, limits on blast furnaces continued and supressed the supply of pig iron and subsequently billet.
In Fengrun district of Tangshan, rolling mills’ profit margins amounted to 50-100 yuan/mt amid rising rebar prices. This would increase the demand for billet.
Declines in rebar inventory across China also supported market sentiment.
SMM data showed that overall rebar inventories, including social and in-plant stocks, shrank to 6.2 million mt as of Thursday August 16, down 1.6% on the week and down 10.3% on the year. This marked the seventh consecutive week of decline, faster than a decline of 0.4% last Thursday.
Social inventories stood at 4.52 million mt as of Thursday, down 0.3% from a week ago and up 1.5% from a year ago. Stocks across steel mills registered at 1.68 million mt as of Thursday, down 4.9% from a week earlier and down 31.6% from last year.
Spot trading of rebar traded actively over the past week, especially earlier in the week when stricter environmental cuts were imposed across Tangshan last weekend. Purchasing volumes from construction sites also rose as they accelerated operations in advance, in anticipation of suspension ordered amid the upcoming heating season.