During the past week in China's domestic HDG market, prices continued to fall following a temporary fluctuating movement. For example, the price of SGCC 1.0 mm x 1,250 mm x C material produced by local steelmaker Angang declined to RMB 4,820/mt, down from RMB 4,900/mt last Thursday.
With HR prices in China continuing to decrease this week, local HDG prices have been influenced: the confidence of traders has been hit and some of them have moved to lower their prices again. Of course, the sluggish transaction situation has also contributed to the price decrease. As for the mills, this week domestic mills maintained a wait-and-see stance and no longer continued to raise their ex-works prices with the aim of stablizing the market prices as they did last week. Due to slower sales, mills' stocks have begun to accumulate, and so mills are reported to be considering overhauls instead of producing at full capacity. Also this week, some leading mills such as Shagang began to decrease their ex-works prices of HR, and HDG producers are likely to follow this example soon. As for downstream users, they also prefer to wait for lower prices given the current downtrend and so their purchasing quantities are very small. As regards traders, some of them have lowered their prices and are fairly pessimistic about the market situation. Meanwhile, given the correction already seen in prices and the fluctuations observed lately, other traders have halted their sales activity and are hoping to see another upward movement in prices. Overall, the number of market players who believe that prices will decline further is than greater than the number of those who believe that prices have touched bottom.
Based on the situation observed this week, HDG prices are likely to continue to fall due to the dull transaction situation and the influence of other leading flat products. Nevertheless, the downward trend of prices has registered a slowdown since last week. As a result, although prices may continue to decline next week, the decrease margin is likely to be limited.