SunSirs: With Demand Remaining Sluggish, the Domestic Market for Mild Steel Plates Was Trending Weaker

Price Trends:

Domestic prices for mild steel plates trended downward last week. According to the SunSirs commodity market analysis system, the quoted price for standard mild steel plates (grade Q235B; 20mm thickness) was 3,382 RMB/ton on July 20, trading sideways within a narrow range at low levels; by July 24, the price had fallen to 3,372 RMB/ton. This represented a cumulative weekly decline of 0.30%, marking a failure to hold the support level and a concentrated release of downward pressure typical of the off-season.

Influencing factors

Upstream Billets: Last week, the market for Tangshan common carbon square billets trended weak, with ex-factory prices lowered by 10 yuan to 3,250-3,258 RMB/ton. With downstream finished steel prices continuing to soften, billet producers faced sales pressure and actively lowered prices to reduce inventory, lacking the momentum to hold price levels firm. While most steel mills have slipped into a state of minor loss—prompting a greater willingness among producers to resist further price drops—this sentiment has been insufficient to reverse the downward trend in spot prices.

Demand Situation: Demand continued to weaken during the high-temperature off-season, with no concentrated restocking to offset downward pressure.

Work stoppages due to high temperatures have increased in the construction machinery, pressure vessel, and shipbuilding sectors, causing operating rates to decline further; end-users are limiting purchases to sporadic, essential daily needs, while large-scale inventory locking and stockpiling have come to a complete standstill. Outdoor infrastructure construction is restricted, leading to a continued month-on-month decline in daily plate procurement volumes; bearish sentiment is mounting among both traders and end-users, who are generally adopting a wait-and-see approach in anticipation of lower price points.

Inventory Status: The industry-wide trend of inventory accumulation persisted, with simultaneous increases in both mill-held stocks and inventories circulating in the market.

Based on incomplete data, as of July 23, national inventories of mild steel plates stood at 292,000 tonnes—an increase of 4,000 tonnes week-on-week. Downstream procurement remains sluggish and mill shipments are hindered, exacerbating the backlog of spot goods. Meanwhile, trader inventories in major distribution hubs rose slightly to 850,000 tonnes; traders hold a bearish outlook and are actively reducing stocks during price rebounds, showing no inclination to hoard. This ongoing inventory buildup continues to cap the potential for price recovery; should prices break key support levels, it could easily trigger a surge in bearish selling sentiment.

Market Outlook:

Overall, in the short term, mild steel plate prices are expected to fluctuate at low levels with a weak bias, while the risk of a further downward slide remains.

Supporting Factors

Cost Support: Spot prices are hovering near steel mills' production costs; further declines would exacerbate losses, prompting producers to hold back supply and limiting the scope for a steep drop. There is no widespread panic selling, and inventory accumulation remains gradual, making a precipitous price collapse unlikely.

Downward Pressures

High temperatures and the off-season have kept essential demand sluggish; the absence of concentrated restocking means there is no demand-side support to cushion price declines. Meanwhile, upstream steel billet prices remain weak, and with no upward cost-side momentum, the bearish trend is difficult to reverse.

Price Range Forecast

In the short term, spot prices for mild steel plates are expected to fluctuate weakly within the 3,365-3,382 RMB/ton range. Barring a surge in concentrated downstream demand, prices will likely repeatedly test the cost support level of 3,365 RMB/ton, while any rebound is unlikely to break through 3,382 RMB/ton.

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