Medium plate market sees price decline with low inventory

SteelOrbis Shanghai Over the past week, the Chinese medium plate market continued in a weak trend. With inventory remaining at a low level, prices continued to see a decline. In the short run, there is almost no momentum for an upturn in the market. By the end of trading on October 31, the average price of 16mm Q235 B in Shanghai, Tianjin and Lecong decreased RMB 27/mt ($3) to RMB 3,630/mt ($460), while that of 16 mm Q345 B was down RMB 25/mt ($3) to RMB 3,750/mt ($476). Since the beginning of this year, exports have consistently remained at a relatively high level. However, the domestic market was not greatly affected by this bulk export because of the corresponding growth in production. Sources report that the government is to tighten macro-control through increasing export taxes, in addition to other measures. The aim of the Chinese authorities is to further curb exports of steel products and as well as other products of high energy consumption. This news has a strong and direct impact on the market. At present, in the Shanghai market, changes have taken place in inventory structure. Since Xinyu Steel is focusing to an increasing extent on high value-added products, their common carbon plate and low alloy plate do not dominate the market any more. In the field of heavy plate, Feida and other medium-sized mills have been claiming a larger market share recently. As regards trading, the market performance is especially sluggish. Some traders, pessimistic about the future, have sold their products at RMB 10-20/mt lower than the market price. However, so far no one has sold off products at an extremely low price. Therefore, the market is unlikely to see a sharp drop. As regards imports and exports, prices remained basically stable. The current quotation for Chinese commercial heavy plate exported to Europe is at around $500/mt FOB. The price of Baosteel shipbuilding plate for South Korea in the Q4 is at $600-610/mt CFR, while that of Anshan New Steel is at $585-590/mt CFR. For the future, the market is expected to continue its bearish performance for a relatively long period. Although macro-control will lead to some negative impact, there is no possibility of a sharp drop due to low inventory and limited capital pressure.