Chinese plate market brisk now, future seems no bright

SteelOrbis Shanghai Medium plate prices in local Chinese markets increased by RMB 15-43/mt ($2-5) week on week to RMB 3,720-3,750/mt ($464-468) for 20 mm products last week after having been stable for a short period. The market supply decreased due to falling imports. The price increase was initiated in the Shanghai market. In Shanghai, some traders increased their prices thinking that major local suppliers Yingkou and Xinyu Steel would increase their ex-factory prices. Later, these two steel mills announced the new ex-factory prices ranging from RMB 3,650/mt ($456) to 3,670/mt ($458), which were higher than the market prices then. Currently, most of the products in Chinese markets are local products. Traders hold a high inventory but they are not eager to sell their products as they are expecting the prices to increase more with further ex-factory price increase announcements from the steelmakers. Currently, the offer prices of traders are approximately RMB 150/mt higher than the market prices. End-users were actively involved in purchasing products before the seven day long May Day, and the price hike in the markets led some traders with too much inventory to sell their products. On the import and export side, China and Indonesia exported totally 20,000 metric tons of medium plate to Italy at Euro 480-500/mt CIF recently. Meanwhile, a S. Korean shipbuilding company and a Japanese steel-maker signed a supply contract for April to September shipments with $580/mt FOB level, which is $100/mt lower than the previous supply contract between the companies. However, the Japanese steelmaker had said on April 18 that it hiked sheet and medium plate prices by Yen 2000-4000/mt ($18-35) for May shipment. The decrease in Japan's plate prices for S. Korea may eat into China's plate exports. Medium plate prices are expected to remain in an upward trend in the short term. Nevertheless, a possible decrease in exports would increase the supply in the country. Furthermore, the local demand for medium plates may also show a decline in summer.