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Plate is expected to usher in reversal opportunity in April
In the aftermath of the 2013 Spring Festival, the plate market experienced a period of fluctuation. According to data from the Lange Steel Information Research Center, as of March 28, the average price of 20mm medium plates in key domestic cities stood at 3,860 yuan per ton. This marked a slight decrease of 5 yuan compared to the end of the previous month. For instance, the price of 20mm plates in Handan (represented by Handan Iron & Steel Co., Ltd.) dropped to 3,680 yuan, down by about 120 yuan from the end of February. Meanwhile, in Shanghai (represented by Maanshan Iron & Steel Co., Ltd.), the price was 4,000 yuan, a decline of 70 yuan from the end of February.
Looking at the trend over the past few months, after a prolonged downward trend in late February and early March, prices have entered a consolidation phase with weaker fluctuations since mid-March. Over the past six years, the plate market has reflected the broader decline in the steel industry. From 2007 to mid-2008, prices surged dramatically, reaching as high as 6,300 yuan per ton. However, this boom was short-lived, and by the second half of April 2008, prices had fallen to a five-year low. In the following four years, prices remained mostly below 5,000 yuan.
Analyzing the pattern of price movements in March and April over the past six years, four of those periods saw sustained increases, while two ended with a bottoming out in early April. Based on this historical trend, there is a higher probability of a rebound in April this year. Moreover, considering the price levels over the past six years, this year’s March-April prices are only slightly above the lows seen during the 2009 economic crisis. With the current economic situation clearly better than in 2009, the market's bottom support is stronger.
Looking at the recent market behavior, the plate prices are expected to reach their low point in early April 2013. Despite this, demand for the plate market remained weak due to lack of confidence in downstream industries. Sales of construction machinery, such as excavators, loaders, and bulldozers, were significantly lower than the same period last year. For example, excavator sales fell by 46%, loader sales by 32%, and bulldozer sales by 48%.
The shipbuilding sector showed some signs of recovery, with global new ship orders increasing slightly in February 2013. China maintained its top position in terms of order volume, but overall production and delivery volumes still declined. Domestic plate inventories were high at the start of the year, but the pace of inventory reduction slowed, easing supply pressure.
Meanwhile, ex-factory prices from major producers have been declining, reducing cost support for the market. While some first-tier steelmakers like Shougang and Baotou maintained stable prices, others like Anshan and Hegang saw significant drops. Second-tier mills also experienced sharp price declines, with limited order increases despite lower prices.
Given these factors, the supply-demand imbalance remains, and the market is expected to maintain inventory levels in the coming weeks before demand picks up. With increased price support and improved liquidity, the plate market is likely to see a reversal opportunity in the second half of April.