Chinese medium plate market improves as downstream sectors are operating well and slab price keep high. On January 27, 8mm and 20mm plate are average at CNY 4293 per tonne and CNY 3959 per tonne in China , down CNY 46 and CNY 50 per tonne compared with January 11.

On January 27, 20mm plate in Shanghai and Tianjin are priced at CNY 3900 per tonne and CNY 3800 per tonne, down CNY 70 and CNY 50 per tonne compared with January 11, however, 5.75mm HRC in Shanghai and Tianjin drop CNY 170 and CNY 130 per tonne respectively.

China steel market witness overall downfall since middle January, however, medium plate market resist the downfall trend much stronger than HRC market.

Shipbuilding and machinery industries will bolster up medium plate market.

China completed 42.43 million DWT of ship building in 2009, up 47% year on year; received 26 million tonnes of new ship orders, down 55% year on year.

Shipbuilding industry is gradually walking out of the low, although it is still not optimistic. It is reported that steel mills receive increasing orders from shipbuilding yards recently. The price rise accordingly.

The machinery industry post total industrial value of 10.75 trillion yuan in 2009, and sales value of 10.48 trillion yuan, up 16.07% and 16.11% year on year respectively.

The improving shipbuilding and machinery industries will shore up the demand for variety plate. Figures from China Iron& Steel Association (CISA) showed that variety plate (including ship plate, boiler plate, pressure vessel plate, bridge plate and pipeline plate) production amounted to 14.7820 million tonnes in January-November, 2009, down 21.52% year on year, while 2.63 percentage points slower than the drop in January-October, 2009.

High slab price restrict the capacity operation in rerollers.

Q235 slab in Hebei province rise to CNY 3340 per tonne, and in Shanghai to CNY 3500 per tonne. The operation cost rise significantly for steel mills. Jinan Steel and Masteel settle 20mm plate ex-works price at CNY 4050-4100 per tonne (including 17% VAT), CNY 150-200 per tonne higher than current spot market.

China medium plate production in December, 2009 reached 5.338 million tonnes, up 19.9% year on year; daily production reached 172,000 tonnes, down 1.8% month on month. It is more likely for slab-buying rerollers to cut down the production. Medium plate production in Jiangsu province (where most rerollers are located) reached 824300 tonnes in December, 2009. Daily production was 26,600 tonnes, down 9.0% compared with November, steeper than average decreasing rate.

Price spread of Q235 slab and 20mm plate is only CNY 400 per tonne in Shanghai, which mirrors squeezing profit margin for rerollers. Presently, Chinese rerollers are more willing to buy imported slabs.

Imported slab offer from CIS was USD 410 per tonne (FOB) in late November, 2009, which can be sold at CNY 3681 per tonne in Chinese markets.

Global slab market surge in line with higher scrap price. Russian billet/slab offer rise from USD 440-455 per tonne to USD 460-470 per tonne (FOB), which can be sold at CNY 4018-4098 per tonne in China . The price level is even higher than Chinese medium plate price. Therefore, China slab imports dive recently. In December, China imported slab reached 43,900 tonnes, down 66.3% month on month.

Rerollers have to whittle down production through facility maintenance. Huawei Steel and Shanggang suspend production right now.