During the past week China's domestic pre-painted galvanized iron prices continued their downward trend. For example, the price of CGCC 0.476 mm x 1,000 mm x C material produced by Wuxi NewDaZhong has now dropped to RMB 4950/mt, down from RMB 5,070/mt last Friday.
Due to high inventories and low demand, China's domestic PPGI prices keep going down. On the one hand, mills are maintaining maximum production as they expect iron ore prices will most likely be cut as a result of the iron ore negotiations, and they want to digest their expensively-purchased iron ore stocks as soon as possible and therebv quickly lower production costs. On the other hand, downstream industries have not yet made any obvious recovery despite the arrival of the warmer weather, and so the deal situation is still quiet. Meanwhile, last Friday China raised the export rebate rate for PPGI products from five percent to 13 percent. However, due to the poor global environment and the lower offer prices from other competitors, export activity is still difficult.
As for the mills, they are also pessimistic about the prospects for future prices. This week Panhua Steel issued its PPGI coil ex-works prices for April, making a downward adjustment of RMB 330-410/mt compared to the March level. Following the adjustment, the new price of the producer's 0.37 mm x 1,000 mm SGCC stands at RMB 5,180/mt ($813/mt). Meanwhile, Baosteel has reduced its PPGI ex-works prices by RMB 450/mt in its new price announcement for May.
Based on the situation observed this week, China's domestic PPGI market is still on a downward track due to high inventories and the poor deal situation. Although the export rebate has been raised, no resulting improvement has yet been seen.