Rising movement continues in China’s medium plate market

In spite of increased production and continuing high inventory levels, the Chinese medium plate market unexpectedly posted a strong upward movement in the past week, greatly supported by China's loose monetary policy.

With no change observed in the overall situation in China's domestic medium plate market, the considerable jump in market prices over the past week exceeded the expectations of many players. Still plagued by overcapacity, the domestic medium plate market recorded little improvement in end-user purchases during the week in question, while inventories remained at high levels. The market's rising trend has of course been welcomed by traders since it means greater profits; however, some players are more cautious due to the rapidity of such a rise which seems to lack the support of market demand. As a result, it is generally agreed that there exists a certain bubble effect in the current upward movement, and so some traders have lately begun to stand aside from trading activities.

As for the reasons for the price climb, the mills played the initial part in pushing up market levels over the past week. Since the international iron ore talks have still failed to yield any result, many domestic players anticipate a failure of the negotiations. Meanwhile, with regard to macro-economic policy, the central government recently expressed its intention to continue its loose monetary policy, thereby providing good news for the market. Ample capital flow is the main factor providing support for the current market.

The shipbuilding plate market, which used to be the weakest link in the medium plate market, also registered a recovery in the past week. Despite the limited orders received from overseas customers, China's domestic shipbuilding industry has continued to maintain its positive performance. From January to May this year, the industrial output of the 1,791 shipbuilding enterprises in China with annual sales of more than RMB 5 million totaled RMB 203.3 billion, up 38.8 percent year on year, which is 18.7 percentage points lower than the increase rate for the same period last year. Meanwhile, China's shipbuilding completions reached 12.16 million deadweight tons in the first five months of this year, up 61 percent year on year; for the same period new orders received amounted to 1.18 million deadweight tons, down 96 percent year on year. In the month of May, new orders received by the Chinese shipbuiding enterprises totaled 190,000 deadweight tons.