Prices have continued to decline in China's domestic HDG market 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 has declined to RMB 4,780/mt, down from RMB 4,820/mt last Thursday.
While domestic HDG prices in China have this week continued to go down, the decrease margin has been relatively small due to the positive influence which the recent rebound observed in domestic long product prices has had on flat products. On the other hand, some traders say that current HDG market prices are close to cost level and, with some mills cutting back on production, the room for further decrease will get smaller. Also, traditionally, with the approach of autumn demand should get better. However, there are some negative factors affecting the market. For example, inventories in the market are now relatively high due to the dull transaction situation. Furthermore, China will celebrate its National Day at the start of October, this year marking the 60th anniversary of the founding of the People's Republic of China. In this connection, some downstream projects are expected to be shut down soon, and, given various traffic restriction measures, steel flow will be negatively affected in some areas of the country.
As for the domestic mills, Panhua Group this week issued its HDG ex-works prices for September, decreasing prices by RMB 100/mt ($14/mt) compared to its ex-works price for August. As a result, the price of 1.0 mm SGCC stands at RMB 4,930/mt ($721/mt), including 17 percent VAT. Baosteel this week also issued its HDG ex-works prices for October, maintaining its prices stable compared to September levels. As a result, its price of 1.0 mm DC51D+Z stands at RMB 5,377/mt ($787/mt), excluding 17 percent VAT.
Based on the situation observed this week, China's domestic HDG prices are likely to move on an almost flat trend in the coming week. If there is any decline, the decrease margin will be limited.