Medium plate, CR/HR gap widens in China
The price difference between medium
plate and cold rolled and hot rolled (CR/HR) coils and sheets continued to increase last week in
China as both product varieties saw price declines.
Medium
plate prices in Chinese markets such as Shanghai, Taiyuan, Jinan, Nanjing and Fuzhou slid RMB 150-200/ton on average last week. On Friday, the average price of 8 mm medium
plate was in the RMB 3'900-4'100/ton ($481-506) range, while that of 20 mm thick
plate was in the RMB 3'450-3'700/ton ($425-456) range. Transaction activity also decreased in the markets as traders were reluctant to conduct business amidst the falling prices.
Last week's fall in prices can be attributed to the increase in domestic medium
plate production in August. Traders, however, have been unwilling to stock up on medium
plate despite the increase in
production.
Meanwhile, the market price of
billet/
slab has also decreased. Therefore, medium
plate producers who use
billet/
slab as their raw materials reflected the extra margin from the reduced
production costs to their prices.
The demand for medium
plate is still weak in
China as customers seem to prefer hot and cold rolled coils. Thus, we can expect that prices for medium
plate will continue to decline this week.
On the CR/HR sheet/coil side, the prices also fell, but at a slower pace than medium
plate. On Friday, the price of 1 mm CR sheet was in the RMB 5'450-5'700/ton ($672-703) range; 2.75 mm HR coil was in the RMB 3'900-3'980/ton ($481-491) range; and 5.5 mm HR coil was in the RMB 3'450-3'580/ton ($425-441) range. The price drop was around RMB 100 for cold rolled sheet and 5.5 HR coil and RMB 20-50 for 2.75 mm HR coil.
China produced 1.37 million tons of cold rolled and 4.78 million tons of hot rolled coils in August. Cold rolled
production was up 8.4 percent month on month, while hot rolled saw 4.1 percent month-on-month growth.
At present,
China's CR/HR sheet/coil market price has been notably lower than steel mills' ex-factory price. Most steel mills are not expected to announce until the beginning of next week their ex-factory price policy for October. Thus, it is predicted that the price uncertainty in
China's CR/HR sheet/coil markets will continue throughout this week.