During the past week prices have continued to decline 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 declined to RMB 4,620/mt, down from RMB 4,720/mt last Thursday.
This week domestic HDG prices in China have continued their slow downward movement. However, with the weather getting warmer, downstream demand has improved and the transaction situation is getting better. Although there are still previously-accumulated inventories in the market, inventory levels now seem to be decreasing due to better demand. Also, given that prices are now close to cost levels, some traders have turned their thoughts to building up their stocks. Meanwhile, the proximity of cost levels also prevents market prices from seeing further large decreases. As for the mills, currently their export situation has improved due to the decreasing offer prices, thereby also providing relief as regards high inventories. Next week sees the start of the long break for China's National Day holiday (October 1-8), which could cause inventories to accumulate again. As a result, most traders are still not optimistic about the prospects for the future market price movement.
As for the export situation, in August China's exports of galvanized plates and strips came to 189,658.79 mt, 29.37 percent higher than the July level of 146,605.747 mt. As for the import situation, in the same month China's import of galvanized plates and strips was 340,280.173 mt, 12.43 percent up on the July level of 302,668.559 mt. In August, both the import and export volumes reached peak levels for the current year after January. Some improvement is currently seen in international trading of galvanized material. In addition, it is said that in October some leading domestic mills will continue to export large quantities of HR.
Based on the situation observed this week, the HDG transaction situation in the Chinese domestic market has improved. However, given the proximity of the National Day holiday, HDG inventories are likely to rise, causing prices to go down further. On the other hand, taking into account the improving demand situation, the decrease margin is expected to be limited.