China's domestic HDG prices dropped slightly during the past week. For example, the price of SGCC 1.0 mm x 1,250 mm x C material produced by Angang has declined to RMB 4,050/mt, down from RMB 4,080/mt on Thursday last week.
Although demand at the start of April is improving compared to March levels as the weather gets warmer, the transaction situation is still not great due to high inventories, poor exports and the overall situation in the global market. Thus, domestic prices have again started to decline after only a week of upward movement. Currently, purchasers are maintaining a wait-and-see attitude and traders are pessimistic about the prospects for future prices.
Last Friday, China raised the export rebate rate for galvanized steel exports from five percent to 13 percent, causing some exporters to make a corresponding reduction in their offer prices. For example, SGCC 1.0 mm x 1,219 mm x C HDG is now being offered at $530/mt FOB by some traders, down $50/mt from the previous price level. 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 Shougang issued its galvanized coil ex-works prices for April, making a downward adjustment of RMB 200/mt down from the March level. Following the adjustment, the new price of the producer's 1.0 mm ST01Z stands at RMB 4,350/mt ($637/mt). Meanwhile, Baosteel has reduced its galvanized ex-works prices by RMB 300/mt in its new price levels for May.
Based on the situation observed this week, next week China's domestic HDG prices may continue to move on a declining trend, especially due to high inventories. However, the decrease rate will slow down as demand improves. Despite the raised export rebate rate, exports will still face difficulties.