China's domestic HDG prices continued to drop slightly during the past week. 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 3,980/mt, down from RMB 4,000/mt on Thursday last week.
Spot market inventories are still at high levels as new supplies of products arrive constantly. Although spot prices are close to production cost levels, most mills are still continuing to produce. However, Shougang is an exception. Its HDG production has almost ceased because of the poor market situation. As a result, the export prices of Shougang HDG are higher than those of the eastern Chinese mills. For example, 1.0 mm thick HDG has been offered at $530/mt by some eastern Chinese mills, whereas the same specification of Shougang material may be offered at $560/mt. Of course the export situation is not great right now. However, since the raising of the export rebate for HDG to 13 percent, Chinese traders and mills have a greater advantage in their offer prices.
As for the domestic mills, Baotou Steel this week issued its galvanized coil ex-works prices, making a downward adjustment of RMB 270/mt from the April level. Thus, the producer's new price for 1.0 mm SGCC material is RMB 4,180/mt ($612/mt), including VAT. Furthermore, Ansteel is expected to decrease its HDG ex-works prices as well this week, by a margin of around RMB 200-300/mt. Mills are not optimistic about the future market.
Based on the situation observed this week, China's domestic HDG prices may continue to move on a declining trend next week, or basically fluctuate at the current price level. As inventories are high and the transaction situation is poor, the market is expected to remain vulnerable during the coming period.