China’s northern medium plate market takes the lead in rising trend

Following the increases in domestic long product prices, the local Chinese flat rolled market also registered a mild rebound over the past week despite continuing strong pressure from inventory levels. In particular, the northern market has shown a relatively strong performance, with a continuous rise observed in market prices. Nevertheless, at the same time China's special-purpose plate market has remained sluggish.

As a result of the recent rebound in hot rolled prices, at the beginning of the past week the market prices of medium plate were generally lower than hot rolled prices. Taking the Tianjin market as an example, medium plate was offered at only RMB 3,000/mt ($429/mt), while prices of thick coils were around RMB 3,220/mt ($472/mt), representing a considerable price difference between medium plate and hot rolled coils. Even after subsequently undergoing an upward movement, the prices of medium plate only climbed to RMB 3,080/mt ($451/mt). In this context, some traders tried to raise their prices over the weekend, which seemed acceptable in the northern market. Currently, the northern China market has been registering a relatively strong performance compared with the market in the south.

Meanwhile, the southern China market has still been characterized by softness, accompanied by mild price fluctuations. In recent days, some materials produced by Tianjin Steel have flowed towards the south, while Angang's wide and heavy plate has also entered the southern market. As a result, southern-based traders have suffered a lot in the face of the continuing bearishness of downstream trading and the increased inventories. In addition, the Canton Fair was recently held in Guangzhou. Traditionally, a great number of export deals is concluded during the fair, and so the steel market always performs positively during this period. However, this year, the slack export performance has failed to push up the medium plate market.

As regards the Shanghai market, since the price difference between hot rolled coils and medium plate is not so big as in the southern market, the slight rise in the local medium plate market has mainly been driven by the recovery of other products. Moreover, in the absence of significant production cuts, the market is expected to continue to face high inventory pressure in the coming period.

On the export side, quotations of medium plate have remained stable on the whole. Since boron-added medium plate has been granted a 13 percent rebate, while there is no rebate for boron-added HRC, some traders are trying to export boron-added HR sheet as medium plate.

According to the latest statistics, China's medium plate production in March totaled 4.555 million mt, down 945,300 mt or 17.19 percent year on year. Average daily production during the month reached 146,900 mt, down by 11,500 mt or 7.24 percent month on month. Meanwhile, medium plate production for the January-March period reached 13.3694 million mt, down 1.9187 million mt or 12.55 percent year on year. Although the extent of the production drop is not as high as the rumored 40 percent, a 17.19 percent production decrease still gives an idea of the strengthening efforts made by mills in production reduction. In April, production is expected to continue to go down.