Following two weeks of stable prices, transaction activity in China's HDG market has shown some improvement and so traders, whose profit margins have been under pressure since the end of last year, are moving to raise their offers. However, due to confusion surrounding offer levels in the market, most traders are still cautious on the prospects for the market in the coming period.
On the one hand, downstream demand for HDG is not sufficiently strong due to the downtrend in real estate investment and the lack of construction projects, and so there is not enough support for HDG prices. On the other hand, HDG mills' prices vary depending on inventory levels and liquidity. The prices of mills with higher inventory are generally lower. The increase in some mills' prices will put pressure on traders' profit margins, and so traders are slow to purchase new materials at the current time.
Overall, China's HDG market is expected to fluctuate somewhat in the week ahead.