Plate prices may see a downturn in China

SteelOrbis Shanghai Chinese plate market is approaching a turning point. The market has begun to panic as the announcement date of export tax rebate policy is coming. It has also been reported that Europe would reduce imports in August, which may influence China's finished steel exports and imports. With such negative news on exports, domestic plate prices of China, which originally rose with the international market, may see some reduction. Japan is currently selling shipbuilding plates to China for July at $610-620/mt FOB level. This is the highest level since $720/mt in the fourth quarter of 2005. Therefore the inquiries from China tend to drop. On the other hand, the inquiries for shipbuilding plate exported from China have begun to increase. It is mainly because of the fact that the shipbuilding plate supply will be short in Shanghai and other regions in summer. Shanghai Pudong Iron & Steel Company will stop medium plate production from August 2006 to 2008, which is estimated to reduce medium plate output by 2.5 million mt during this period. Under these circumstances, Japanese steel mills may hike their shipbuilding plate export prices for the third quarter to $650/mt FOB. Meanwhile in local Chinese markets, the common carbon plate prices began dropping gradually. Due to the shortage of supply resources, the low alloy plate prices continued going up, but the range of increase was smaller last week. The impact of positive factors on the market has almost come to an end now. Therefore, the market is unlikely to go up in the short term and negative news may even pull prices down next week. But the shortage of supply will keep the range of decline small. The prices are expected to fall in Lecong market especially, but they may retain the current levels in Shanghai because steel mills such as Yingkou and Baosteel, reportedly, cannot make any deliveries for the moment. Nevertheless, influenced by the falling sheet and coil prices, some traders stopped asking for further price increases. The weekly increase range of low alloy plates was larger than that of common carbon plate last week. According to the industry insiders, the low alloy plate inventory is now at a low level and the demand is brisk.