Prices of carbon steel billets in China are expected to ease slightly this month, mainly under pressure from subdued demand in the summer lull and fading cost support from raw materials prices, according to Mysteel's latest monthly report on the sector.

On May 31, the price of the Q235 150mm square billet in Tangshan in North China's Hebei province stood at Yuan 3,020/tonne ($446/t), lower by Yuan 20/t from the level on April 30, according to Mysteel's assessment.

During May, stable demand from overseas markets and positive profit margins Chinese mills could earn on billet sales had encouraged steelmakers to maintain or ramp up their production pace. As a result, billet availability in Tangshan increased on month, with the tonnage of billets sold or exported by the 21 steelmakers thereunder Mysteel's coverage averaging 44,700 tonnes/day over the end-May period, higher by 11.2% or 4,500 t/d from the level in end-April.

On the other hand, the heatwaves and steady rains in various regions are dampening demand for finished steel products and impacting that for semi-finished steel items like billets in turn, the report noted.

Consequently, daily billet consumption among the 34 re-rollers in Tangshan monitored by Mysteel averaged 46,600 t/d in end-May, declining by 15.8% or 8,600 t/d from end-April.

Meanwhile, the approaching summer slowdown in steel consumption starting this month will cause billet demandto weaken, exacerbating the problems of accumulating stocks and retreating prices.

In addition, the report also noted that supplies of iron ore are expected to loosen this month – as Mysteel Global has reported – which would also partly weaken price support for billets from the cost side, leading to a decline in prices.

Source:Mysteel Global