SunSirs: China's Billet Supply Increases by Approximately 8% Month-on-Month in January

Billet Supply and Circulation in January

1. Nationwide billet inventory at sampled distribution enterprises rose to approximately 2.6 million tons in January, marking an 8% monthly increase and a 6% year-on-year growth. North China accounted for about 52% of the total, while Northeast China represented 20%.

Billet supply rose across all regions this month, with the most significant increase observed in North China. This was primarily driven by increased production shifts among steel mills in the region. Slowing finished steel product transactions and poor profitability led to more maintenance on strip rolling lines, redirecting molten iron flows toward billet production. North China received a small volume of export orders, with domestic trade resources remaining the main focus. This month's export order quotations for steel billets ranged between 440-450 RMB/ton, primarily concentrated in Northeast China. Major mills secured acceptable orders, with export orders mainly scheduled for February-March.

2. In January's domestic steel billet inflow distribution, North China accounted for 64% and East China for approximately 27%. Downstream billet processing plants procured based on demand, primarily purchasing low-priced billets. Finished steel product transactions at billet processing plants increased month-on-month, with a slight uptick in billet demand.

February Billet Supply Forecast

1. Select blast furnaces will resume operations in February, with early-month production still primarily directed toward external sales. While some rolling mills may restart operations, reducing billet sales from steel mills, the overall impact remains limited. Billet supply will remain elevated.

2. Downstream billet processing plants halted production during the Spring Festival holiday, with transactions nearing zero. Post-holiday, substantive downstream demand recovery remains sluggish (primarily concentrated in March). Coupled with high inventory pressure, average billet demand is projected to drop to low levels, potentially reaching 20,000-25,000 tons per day. This will increase pressure on social billet inventories.

As an integrated internet platform providing benchmark prices, on February 6th, the SunSirs steel billet benchmark price was 3000.00 RMB/ton, a decrease of 0.66% compared to the beginning of the month (3020.00 RMB/ton).

Application of SunSirs Benchmark Pricing：

Traders can price spot and contract transactions based on the pricing principle of agreed markup and pricing formula (Transaction price=SunSirs price + Markup).

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