Today, Friday, April 2, local billet prices in Tangshan have posted another sharp hike, up RMB 140/mt or $21/mt compared to the previous day amid a fresh announcement by the local government as regards stricter emissions controls at steel plants and fines for violations of the rules. The further domestic gains create room for import billet prices to rise further, sources have told SteelOrbis.
The steel mills in Tangshan have increased billet prices by RMB 140/mt ($21/mt) today to RMB 4,960/mt ($755/mt) ex-works, including 13 percent VAT. And though the average spot price in China has been going up at a much slower pace than in Tangshan, it has also improved, rising by RMB 70/mt ($11/mt) to RMB 4,818/mt ($734/mt) ex-warehouse on April 2.
The price rises have reflected the general expectations in the market that crude steel production will be reduced and that mills will not have an opportunity to increase outputs even in the case of higher demand. According to the document issued by the Tangshan authorities, in order to further improve the city's ecological controls, the local steel companies will be charged RMB 500,000 ($76,163) in the event of any major malicious ecological violations. The Tangshan Municipal Bureau of Ecology and Environment will control the implementation of all earlier announced restrictions and will fine violators from April 1, 2021 until March 31, 2022. In addition, more steel companies have been placed in category D from categories B and C after checks, meaning they will have to implement bigger production cuts.
As a result of the local billet price gains, foreign suppliers will be in a rush to increase prices to China. “The high appetite for import billet will continue in April-May,” a source from China said. The negotiations for ex-ASEAN billet have already started at $650/mt CFR, versus $640/mt CFR in the latest confirmed deal earlier this week, while just late last week and early this week a number of deals were done at $630-635/mt CFR. Moreover, offers from some suppliers from ASEAN have already been voiced at up to $660/mt CFR.
One supplier is rumoured to have sold ex-India billet at $620-625/mt CFR to China early this week, and though this has not been confirmed by the time of publication the level was reasonable, according to sources. The new tradable value for non-ASEAN billet, Russian and Indian billet in particular, should be up to $635/mt CFR, SteelOrbis has learned. Around 40,000-50,000 mt of ex-Russia billet were traded to China at $620-625/mt CFR earlier this week.
$1 = RMB 6.5649