Medium plate, CR/HR gap widens in China

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.