China’s medium plate market remains very sluggish

Against the background of the continuing sluggishness of its trading performance, the Chinese medium plate market began to see a certain slowdown in its descending movement over the past week. Although limited downward room is anticipated for the future market according to most players, the domestic market is unlikely to register any big improvement in the short term as regards its current sluggishness.

In recent days the prices of medium plate in the various regions in China have recorded a continuous decline. In Shanghai, in the past week the market prices of medium plate materials from second and third tier mills were the first to indicate a decline, to be followed by the prices of materials from first tier mills. Although the market did not plunge sharply, nevertheless it declined slightly on a daily basis throughout the past week, causing players to be increasingly pessimistic as regards the prospects for the future trend of the market.

Considering the continuing softness in the recent medium plate market, a growing number of downstream buyers are inclined to stand aside from market trading; meanwhile, those who plan to source materials have gained increased bargaining power in their efforts to conclude deals, leading to the continuous decline of deal prices in the market.

Looking at the current situation, unlike previous years the Chinese medium plate market this year does not appear to be registering any price ascension ahead of the National Day holiday (October 1-8). In the past, the active purchases made by downstream industries before the holidays usually boosted market prices significantly. However, this year, the situation has changed. Due to the successive arrivals in the market during the holidays, the post-holiday market will have to face the problem of high inventories, and so there are concerns that a further sliding movement may be seen after the holidays.

On the mills' side, almost all mills have made reductions to their ex-factory medium plate prices. Once mills' prices approach the production cost level, there will be limited room for further decrease in market prices. In the past week, Magang slashed its ex-factory prices by RMB 520/mt ($76/mt) for mid-September, with the arrival cost of its common carbon plate in Shanghai reaching RMB 3,470/mt ($509/mt). Meanwhile, also in the past week, Anyang Steel made an overall reduction of RMB 80/mt ($12/mt, tax-excluded) to its medium plate prices.