China’s PPGI market picks up slightly

Given the climbing production costs of PPGI, China's domestic PPGI market moved up by a small margin during the past week.

Over the past week, the 0.426 mm thin PPGI prices have registered a considerable increase because of the tight supply of this specification in the market. At present, Shandong Kerui's prices have generally been at the same levels as Shandong Huijin, with their 0.3 mm PPGI offered at RMB 5,850/mt ($858/mt); meanwhile, the 0.3 mm PPGI prices from Huayun have reached at RMB 5,950/mt ($872/mt); and Linqing Hongji has offered its 0.4 mm PPGI at RMB 5,650/mt ($828/mt), with the prices of 0.47 mm PPGI staying at RMB 5,450/mt ($799/mt) from Guangzhou.

In recent days, the prices of upstream base materials for PPGI have jumped up remarkably. Currently, the prices of thin SPHC HRC registered a rise of RMB 200/mt ($29/mt) to RMB 4,000/mt ($557/mt), while prices of 0.3 mm full hard coils have climbed to RMB 4,450-4,470/mt ($652-655/mt). Thus, on account of the increased costs and low stocks of base materials, some PPGI producers have intended to hike their prices.

In addition to the cost pressure, the PPGI market has also faced bearish demand on the downstream side. Against the slack purchases made by some downstream enterprises, the PPGI traders are now in a dilemma. If they hike their prices further, then the downstream buyers won't accept it; while if they lower their prices, the lofty costs make it impossible.

As regards the future, one critical factor for the Chinese steel market is whether the government will continue its loose monetary policy or not. According to many analysts, there will be some changes in the macro policies, so panic mood begins to appear in the steel market. It is estimated that hot rolled prices will turn around and fall down in the near future, which will drive down the PPGI market accordingly.