During the past week China's domestic pre-painted galvanized iron prices continued to rise. For example, the price of CGCC 0.476 mm x 1,000 mm x C material produced by Wuxi NewDaZhong has increased to RMB 5,850/mt, up from RMB 5,700/mt last Friday.
With Baosteel this week sharply raising its ex-work prices for flat products, China's domestic spot PPGI prices have been pushed up again along with other flat product prices. PPGI inventories in the Chinese market are currently not high, and this is helping to boost traders' confidence regarding the prospects for a further price rise. However, as the low season for the steel industry in China has now arrived, the transaction situation is not so good; buyers are maintaining a wait-and-see attitude and are very cautious as regards purchases. As the iron ore talks are still ongoing, the government, traders, mills and downstream users are all waiting for the final outcome. If the Chinese side's original target of a 40 percent cut is not reached, the mills will likely try their best to transfer the cost pressure on to users and to push prices up as soon as possible. So far, domestic demand for PPGI has not indicated any negative response to the continuous price rise and has shown no sign of sagging. As a result, market players are still optimistic about the future trend of the domestic PPGI market.
As for the domestic mills, Baosteel this week issued its PPGI ex-works prices for August. The price of the producer's 0.5 mm EDC51D now stands at RMB 6,257/mt ($916/mt), excluding 17 percent VAT, i.e. RMB 500/mt ($73/mt) higher than the July level. In general, PPGI mills in China will continue to push up their prices.
Based on the situation observed this week, although the transaction situation for PPGI in China is not so good, the momentum provided by the price hikes of the leading mills will continue to push the market up. Meanwhile, inventories are currently not high. In short, the upward trend of local PPGI prices in China is likely to continue into next week.