SteelOrbis Shanghai
China's flat markets are still in the off-season period. Market players are not quite optimistic. They are worried about the future and they are praying for a recovery in exports.
Currently, medium
plate production in
China is relatively limited, due to the electricity bottleneck. The government restricts steelmakers' power
consumption because of the requirements from farmers. In addition to the power shortage; heavy rains and hot weather is also curbing the demand from the downstream industry. Most of the
plate makers have arranged overhaul works. However, when the August ends,
plate production will begin to rise sharply and increase its impact on the market.
Export prices are still notably higher than domestic prices, but there are not many shipments. Exports are expected to recover and relieve the domestic inventory pressure when the summer vacation in
Europe is over. The future trend of Chinese plates depends on how much the traders can export, because it is hard for domestic demand to drive up the prices.
We are in a hot week for the
shipbuilding market. Sources reported that, South Korean Hyundai Heavy Industries and other
shipbuilding companies are negotiating with Chinese
Baosteel and other steel mills on the
shipbuilding plate prices for Q4. For the new contracts,
shipbuilding companies are seeking to maintain the current level of $600/mt FOB
China, indicating that they may increase the quantity of imports this time. Chinese steel mills are pushing for $630-640/mt FOB
China levels, up $30-40/mt compared with the current contract price level. Chinese steel mills predict that
shipbuilding plate supply in Asia will be tighter in the 4th Quarter, compared to the 3rd Quarter.
For the moment in local Chinese markets, the quantity of low priced and high priced supplies is lessening gradually. Therefore, the gap between the market prices of different regions is closing. Although some mills increased their ex-factory prices for plates, traders preferred to reduce their prices due to high inventory costs. Decreasing prices increased the sales of some traders, but the overall market performance is still quite weak. Therefore, traders are not intending to raise their prices.
The market inventory level moved flat last week. Sources reported that, Yingkou Steel produced no supply for August contracts because of its overhaul works. Therefore, August contracts of the company will be cut by more than 80 percent according to the sources. There is also very little supply from Xinyu Steel, which mostly consists of thin specifications. Looking at the overall quantity, the market inventory seems high; however, the supply of some specifications is short. The inventory is expected to maintain the current level next week. But the ex-factory price increases by some mills and the rise in hot rolled coil prices may also support
plate market prices slightly.