China's domestic HDG prices have followed a fluctuating trend during the past week. For example, the price of SGCC 1.0 mm x 1,250 mm x C material produced by local steelmaker Angang first declined to RMB 4,680/mt, before again jumping back up to RMB 4,700/mt, the same level as last Thursday.
As the traditional low season for the steel sector in China has arrived, activity in terms of HDG transactions is now not so great and spot prices have begun to fluctuate following a continuous rise over a period of two months. Most players are currently in wait-and-see mode in this market. Meanwhile, the annual iron ore contract talks remain deadlocked. Although the CISA is still targeting a price cut of over 40 percent, so far no sign of agreement has been seen from the iron ore giants. If the Chinese side fails to achieve its target, then mills in China will face high production costs in a situation of low demand market. Maybe this explains why mills in China have continued to raise their ex-works prices recently. Currently in the spot market, CR prices are slightly lower than HDG prices, and this has also contributed to the fluctuating movement of HDG prices.
With regard to the export situation, this week China's HDG export prices climbed up compared with last week's levels. Currently, 1.0 mm thick HDG with 100g/m² Zn coating is being offered at $650/mt FOB China main ports, $20/mt higher than last week.
As for domestic mills, Union Steel China this week issued its ex-works HDG price list for July, raising prices by RMB 350/mt ($51/mt) compared to its ex-works price for June. As a result, the price of 1.0 mm SGCC stands at RMB 5,050/mt ($739/mt). Also this week, WISCO raised its ex-works HDG prices by RMB 510/mt ($74/mt) for August. Despite the fluctuating movement of spot prices, the mills are expecting to see a further increase.
Based on the situation observed this week, China's domestic HDG prices have entered a relatively flat trend and most players are maintaining a wait-and-see stance towards the market. Over the coming week prices are likely to continue to fluctuate within a narrow margin while the transaction is expected to get even worse due to the hotter weather.