Re-rollers in Tangshan continued to see high levels of finished product sales on Monday, continuing the trend from last week, which resulted in the discount of spot billet to rebar futures reducing.

April to May delivered billet forwards were traded at a CNY 150/tonne ($21) discount towards Shanghai Futures Exchange rebar among traders, CNY 20/t higher than the spot market.

Re-rollers bought billet actively corresponding to their finished products sales. One re-roller tells Kallanish his finished product inventories had declined by more than half compared with the first day after the Spring Festival holiday. The firm purchased two days’ worth of billet production at CNY 3,090-3,100/t on Monday morning. 

The recent sales levels were mainly attributed to the fact that downstream users did not reserve inventory before the Spring Festival, according to trading sources.

Meanwhile, re-rolling margins reached breakeven, with capacity usage of local re-rollers going up week-on-week.

As a result, market inventories of Tangshan billet decreased 64,000 tonnes w-o-w to 1.14 million tonnes on Monday, even though local mills’ sale volumes rose.