SteelOrbis Shanghai
After slight decrease in the beginning of last week, Chinese medium
plate market prices began climbing similar to all other steel products, due to both
Baosteel's price hike and news about long-term
iron ore agreements.
The decline due to the sluggish commercial activity was especially obvious in the middle of last week. Some traders with high inventories lowered their prices to sell more products, leading to slightly further decline in market prices. However, the business activity became brisker and prices went up towards the weekend. The prices continued to increase early this week and in conclusion, the prices increased around RMB 20-30/mt ($3-4) week on week on May 24.
Sources reported that domestic buyers recently preferred to postpone their purchases due to the upcoming export tax rebate policy. Besides, traders who do not have over inventory are not willing to sell their products from low prices, because they think that, current ex-factory price increases of steel mills are too much. Therefore they prefer keeping their prices high and waiting, instead of emptying their stocks and purchasing new products at high prices. On the other hand, as overseas steel mills, including POSCO, accepted the 19 percent increase in
iron ore price one after the other, market players began to think that domestic steel mills would also have to accept a similar increase, no matter how much they are reluctant. Therefore, market prices began increasing again towards the end of last week.
Baosteel's third quarter price list also drives up the market prices. The increase range in market prices is sharp after the announcement, and it may influence the market in short term. In addition, price hikes by Tianjin, Nanjing and Jinan Steel play an important role in the market as well.
Meanwhile, the prices in various local markets differ according to their supply situations. For example, there is a shortage of 6 mm and 8 mm plates mainly in Shanghai market. Therefore their prices are higher.
On the import and export side, inquires for Chinese
shipbuilding plates have increased recently. Some deal prices are at $600/mt FOB and even higher. This price level is higher than Japanese steelmakers' deal price to South
Korea. Except for long-term contracts, it is not easy for Chinese
shipbuilding plate producers to obtain deals on spot business.
Chinese steelmakers have stopped making export offers for
HRC and medium
plate to South
Korea with the expectation for a decline in the export rebate rate.
The short term domestic market trend is optimistic with the influence by the export tax rebate policy and price hikes by steelmakers. Nevertheless prices may see a downward trend in the end of May.