Prices have continued to decline during the past week in China's domestic HDG market. 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 4,720/mt, down from RMB 4,780/mt last Thursday.
This week domestic HDG prices have maintained their slow downward movement. Currently, inventories are accumulating due to the dull transaction situation and also due to the increasing outputs of the mills. HDG production figures in China hit peak levels for this year in the month of August. With autumn coming, downstream demand is expected to improve and the mills are likely to continue to raise their outputs. This week HR and CR prices in China resumed their downward trend following their fluctuating movement of the previous week, thereby raising the concerns of some traders of HDG to a certain extent. Most traders believe the downward movement of HDG prices will continue. Meanwhile, some traders are said to be ready to stock materials after a further decrease since market prices are very close to cost levels.
As for the production situation, in August China's domestic production of galvanized plates and strips hit a peak for the current year at 1,919,900 mt, 8.57 percent higher than the July level of 1,770,000 mt. According to these figures, pressure from inventory is sure to increase.
Based on the situation observed this week, HDG prices in China are likely to go down further due to the dull transaction situation and inventory pressure. However, with demand likely to register some improvement, the decrease margin is expected to be limited.