Chinese medium plate market still shows downward movement

Remaining on its downward trend, China's domestic medium plate market registered a mild decline in certain regions over the past week. On account of insufficient orders, mills have been coming under great pressure in recent days.

As a result of the previous rapid drop in steel prices, traders became quite cautious as regards placing orders with the mills. Thus, despite the sluggish commercial activity in the recent market, traders have not felt much inventory pressure. On the other hand, due to the reduced orders placed by traders, mills are having to face very strong pressure from their stock levels, and it is heard that some mills have consequently moved to curb their production. For instance, mills like Nanjing Steel and Liuzhou Steel are now only producing to fill the orders they have already received.

Meanwhile, the price difference between medium plates in the southern and in the northern regions has expanded in recent days. In the north, sale prices of medium plate are below the level of RMB 3,200/mt ($469/mt), while medium plate prices in the southern regions are still at RMB 3,500/mt ($512/mt). Considering the relatively high price levels in the local market, some southern-based traders have begun to show interest in sourcing material from the north.

As regards shipbuilding plate, domestic demand has seemed quite soft in recent days. According to the statistics, in January China's shipbuilding plate production totaled 1.0544 million mt, down 37.3 percent year on year and down 14.9 percent month on month.

On the export side, the current export price of medium plate is around $470/mt FOB; this price level has been based on expectations of a new export tax rebate for hot rolled products of 13 percent. Today, March 25, an executive meeting of China's State Council confirmed that export rebate rates for steel products are to be increased. Further confirmation is now being awaited as regards the actual rates which will be implemented.