Chinese plate export quantities may decline in future

SteelOrbis Shanghai Inquires for Chinese shipbuilding plates have increased recently in the export market. Some deal prices are at $600/mt FOB and even higher. This price level is higher than Japanese steelmakers' deal price to South Korea. Except for long-term contracts, it is not easy for Chinese shipbuilding plate producers to obtain deals on spot business. Chinese steelmakers have stopped making export offers for HRC and medium plate to South Korea with the expectation for a decline in the export rebate rate. The short term domestic market trend is optimistic with the influence by the export tax rebate policy and price hikes by steelmakers. Nevertheless prices may see a downward trend in the end of May. Sources reported that domestic buyers recently preferred to postpone their purchases due to the upcoming export tax rebate policy. Besides, traders who do not have over inventory are not willing to sell their products from low prices, because they think that, current ex-factory price increases of steel mills are too much. Therefore they prefer keeping their prices high and waiting, instead of emptying their stocks and purchasing new products at high prices. On the other hand, as overseas steel mills, including POSCO, accepted the 19 percent increase in iron ore price one after the other, market players began to think that domestic steel mills would also have to accept a similar increase, no matter how much they are reluctant. Therefore, market prices began increasing again towards the end of last week. The upcoming reduction in export tax rebate will certainly lead to a decrease in the competitiveness of Chinese products in international markets. Therefore, the quantity of Chinese plate exports may decrease and the supply in the domestic market may increase.