Medium plate market short of supplies from leading mills

SteelOrbis Shanghai The Chinese medium plate market climbed up a little over the past week, against a background of a further decrease in supplies from the leading mills. Meanwhile, an improved trading performance was seen during the week. On December 20, the average price of 16 mm Q235 B in Shanghai, Tianjin and Lecong was up RMB 26/mt ($4/mt) week on week to RMB 3,593/mt ($459/mt), while that of 16 mm Q345 B was up RMB 25/mt ($4/mt) to RMB 3,690/mt ($471/mt). Looking at the Chinese market situation throughout the past week, prices in the northern regions rebounded after have touched bottom. Nevertheless, a big price gap still exists between the north and the south. Due to the ongoing transportation difficulties, it is very difficult to send supplies from the north to the southern regions, where there is a tightness in market supply as a result. Just take Shanghai market as an example: except for a small quantity of Yingkou products, the major market supplies are coming from the medium- and small-sized mills. The prices of these mills range from RMB 3,600/mt ($461/mt) to RMB 3,700/mt ($474/mt) - around RMB 50-100/mt ($6-12/mt) lower than is normal for the large-scale mills. Currently short of several varieties of products, the market inventory has already run out of eight mm plate. Sources report that most leading mills are also seeking to complete their export orders as soon as possible. Consequently, they have changed their sales and production strategies, transferred their focus from the domestic market to the international market. Meanwhile, as regards the medium-sized mills, since they lack advanced equipment and technology, most of them can only produce common carbon plate and some other standard products rather than high value-added products. This means they can merely cover and influence local and neighboring areas. As for imports and exports, medium plate exports are currently in good shape. Since heavy plate prices are quite steady in Europe, some of the domestic mills have attached considerable importance to this market, refusing some orders from Asia. Market insiders indicate that the quotations for shipment in April 2007 are around $550-600/mt FOB, up $10/mt or so compared with the previous level. As regards the future market movement, great changes will not be seen in inventory in the short term. If macro-economic and market factors are ignored, judging by traditional or past history, prices will not fluctuate greatly before China's Spring Festival. Therefore, the future market is expected to continue its steady trend during the coming weeks.