Chinese HDG market declines at slower pace

During the week ending November 3, hot dip galvanized (HDG) steel prices in the Chinese domestic market have continued to trend down, though at a slower rate. At the same time, buyers are not really interested in placing orders. As of November 3, average HDG prices in the main markets in China are as follows:

As of November 3, the price of SGCC 1.0 mm x 1,250 mm x C galvanized products in the markets of Shanghai, Guangzhou and Boxing respectively stands at RMB 5,140/mt ($815/mt), RMB 5,450 /mt ($864/mt) and RMB 5,150/mt ($816/mt); meanwhile, the price of SGCC 0.5 mm x 1,000 mm x C stands at RMB 5,300/mt ($840/mt), RMB 5,850/mt ($927/mt) and RMB 5,000/mt ($792/mt) in the above respective markets. These prices include 17 percent VAT ($1 = RMB 6. 31).

Despite the slowing of the downtrend in the domestic HDG market during the past two weeks, negative factors still influence the market. On the raw material side, iron ore prices have been dropping down rapidly amid weak demand due to the overhauls and production cuts of domestic mills. Accordingly, the steelmakers have lost the support of production costs. On the other hand, under the influence of soft demand and tight capital flow, downstream buyers in the automotive, white goods and structural steel sectors have reduced their booking volumes for HDG. In addition, domestic HDG production is still characterized by high capacity utilization rates. Thus, the imbalance between demand and supply is expected to last in the short term.

Meanwhile, given the ongoing economic uncertainty in Europe and the US, Chinese steel market players are becoming more cautious. HDG traders are losing confidence in the future and are not sure how far prices will decline.

It is expected that HDG prices in China will continue to move downward over the next seven days.