China's domestic HDG prices have continued to climb up during the past week, as forecasted in our last report. For example, the price of SGCC 1.0 mm x 1,250 mm x C material produced by local steelmaker Angang has risen to RMB 4,280/mt, up from RMB 4,150/mt on Thursday last week.
Although the upward movement in China's HDG market has continued this week, domestic HR prices have begun to decline and other steel products are expected to follow this trend soon: it just seems a question of time. As for the domestic HDG market, some major specifications are lacking at the current time, especially 1.3-1.5 mm thick coils. Insufficient inventories mean that domestic HDG prices are continuously increasing. In addition, the high price of CR also favors the increase of HDG prices. As for the downstream side, local PPGI mills are now almost working at full capacity due to the increasing prices of PPGI, and so there is a positive transaction situation for HDG used in PPGI production. On the other hand, as for HDG used directly in construction, the transaction situation has weakened somewhat this week.
With regard to exports, some exporters have raised their offer prices this week on the back of the increasing domestic prices. 1.0 mm thick HDG with 100g/m2 Zn coating is now being offered at $530-560/mt FOB CMP. Meanwhile, 0.5 mm thick HDG is at $600-630/mt FOB CMP. It is difficult to say whether purchasers will accept the increased offers.
As for domestic mills, Bensteel this week issued its ex-works prices for June, increasing its HDG prices by RMB 150/mt ($21/mt) compared to May levels. As a result, the price of 1.0 mm SGCC stands at RMB 3,900/mt ($571/mt). More mills are expected to raise their ex-works prices soon in line with the rising market trend.
Based on the situation observed this week, the upward movement in China's domestic HDG market may continue into next week. However, as the HR market has begun to register a decrease, the uptrend in the local HDG market does not appear likely to continue in the long term. A change may be seen in one or two weeks' time.