Artificial increase in medium plate market prices

SteelOrbis Shanghai Chinese medium plate market turned better in the last seven days after the small fluctuations in the last few weeks. Although the prices have climbed slightly, the commercial activity is still bearish. On August 29, the average price of 16 mm Q235 B in Shanghai, Tianjin and Lecong increased RMB 50/mt ($6) to RMB 3,553 /mt ($446) and that of 16 mm Q345 B increased RMB 20/mt ($3) to RMB 3,720/mt ($467). There are several factors behind the rise. The first is the price adjustment of steel mills. The announcement of price list for Q4 by Baosteel in the previous week has exerted a great impact on the market. In earlier times, it was said that Baosteel's price list for Q4 would see a decrease, which was bad news for the market. However, the actual prices are better than the market expectations. It is on the day of price announcement that the prices of hot rolled coil and other products rebounded. In the price list, medium plate prices increased RMB 100/mt ($13). Despite the small market share of Baosteel's medium plate, it still can boost the market which has been silent for a quite long time. In Lecong, the price hike of Shaoguan Steel also drove up the market prices. Secondly, the rise in the prices of hot rolled and other products also pushed up medium plate prices. After touching the bottom, prices of hot rolled products once even exceeded that of medium plate through a sharp rebound, which supported the medium plate prices to a certain extent in the background of low hot rolled inventory, as these two products can be substitutes for each other. Looking at the market price trends, we see that the market is stable in northern regions compared with the southern regions. On the imports and exports side, due to the sluggish purchase of South Korean importers, the quotations of Chinese medium plate exports to South Korea are still weak. At present, the quotation of medium plate shipped in the end of September by Chinese steel mills is about $490-500 CFR, down $30/mt month on month. The price increase is an artificial one because the conditions in the market are not sufficient for a rise. With slight increase in the market inventory soon, it is expected that prices will change in southern and northern markets next week. The market is expected to continue fluctuating incrementally in the short term.