During the past week China's domestic pre-painted galvanized iron prices continued their downward trend as we predicted in our last report. For example, the price of CGCC 0.476 mm x 1,000 mm x C material produced by Wuxi NewDaZhong has now dropped to RMB 5,100/mt, down from RMB 5,300/mt last Friday.
Due to the high inventories and low demand, domestic PPGI prices continued to decrease sharply this week. The transaction situation is still not great as purchasers generally maintain a wait-and-see stance and are very cautious about purchasing at this current bearish time. Unlike the situation with HDG, most traders are worried about the future price trend of PPGI. However, as demand is showing some improvement with the arrival of warmer weather, the transaction situation has given some signs of an amelioration this week. Furthermore, inventories are now showing a downward tendency. Also, the government is planning to raise the export rebate rate for HDG and PPGI from the present five percent to 17 percent. Consequently, the decrease trend in China's PPGI market could come to a halt within the next few weeks.
As for the mills, this week Ansteel issued ex-works prices for the new month, with its PPGI prices remaining unchanged. Thus, the producer's ex-works price for TDX51D+Z 0.5 mm x 1,250 x C PPGI still stands at RMB 5,400/mt ($791/mt). It is also said that the mills are planning to cut production in the next month and so supplies are expected to fall.
Based on the situation observed this week, China's domestic PPGI market has show some improvement, with lower inventories and higher demand. Next week PPGI prices in China will most likely start to move on a flatter trend, with prices showing some limited fluctuations.