Chinese HDG market trends between stable and slightly up

In the past week, the Chinese hot dip galvanized (HDG) market has trended between stability and slight upward movement.

The average HDG prices in the main markets in China are as follows:

As of August 18, 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 5,810/mt ($911/mt), RMB 5,980 /mt ($937/mt) and RMB 5,550/mt ($870/mt); meanwhile, the price of SGCC 0.5 mm x 1,000 mm x C stands at RMB 5,650/mt ($886/mt), RMB 6,360/mt ($997/mt) and RMB 5,560/mt ($871/mt) in the above respective markets. These prices include 17 percent VAT ($1 = RMB 6. 38).

On August 12, Baosteel issued its flat steel product prices for September, raising its HDG price by RMB 150-200/mt ($23-31/mt). This is the first time in a while that Baosteel has increased its flat steel prices, and so confidence among traders has received a boost. Another major domestic steel producer WISCO has followed the example of Baosteel and has also raised its HDG prices. Furthermore, the increase in raw material costs can also provide support for the domestic steel market. However, some market players state that, while Baosteel has increased its flat steel prices, the increase margin was limited, indicating that the steel mills are cautious about the future prospects for the domestic flat steel market. In addition, HDG orders for August are at high levels, while there are fewer orders for September. Accordingly, it is thought that there will be increased pressure in the market from supply in the coming period. In this regard, the risk factor may increase in the HGD market.

Summing up, even though postive factors support the Chinese HDG market, risks still exist. It is thought that domestic HDG prices are unlikely to register significant increases in the coming week, but could instead trend sideways