China: Heavy plate export offers jump $40/t w-o-w on higher raw material costs

Chinese mills raised their heavy plate (SS 400) export offers this week by $40/t to $920/t CFR in contrast with $880/t CFR a week ago. The rise in export offers is primarily due to soaring raw material and subsidiary material prices for steel, i.e iron ore and coal.

High raw material costs, more hikes expected in March

POSCO, Hyundai Steel and Dongkuk Steel are planning to raise heavy plate export offers further in March amid soaring raw material costs. For instance, China's imported Australian iron ore (Fe 62%) prices have touched $160/t CFR levels.

Slow demand except from shipbuilding

However, demand from the shipbuilding and non-shipbuilding sectors is recovering at a slower pace than expected, but prices are likely to remain in upward trend due to limited supplies and higher imported prices.

Demand from the non-shipbuilding sector such as construction is still sluggish. Steel mills have been planning to raise heavy plate prices since end-Feb'22. However, they could not due to low acceptance from the market.

Considering the steady demand from shipbuilding, it is difficult to increase domestic supply of plates. The increase in imports is also majorly driven by shipbuilding demand.

How long will price rally last?

The Chinese government's export and price related policies for heavy plates might be a worry, but, the rise in steelmaking raw material prices amid Russia's invasion of Ukraine, besides strong global prices, will support the price increase in the domestic market in the near term.

Even if the war gets terminated early, it would be difficult to rule out the possibility of sanctions against Russia ending immediately and the resulting rise in raw material prices will continue.

Meanwhile, if demand from the non-shipbuilding sector does not show recovery, then there might be resistance to the price hikes.

Note: This article is published under an article exchange agreement between SteelDaily and SteelMint.