Chinese HDG market uptrend accelerates

During the past week the Chinese HDG market has continued the rising trend seen in previous week, though at a more rapid pace. Average HDG prices in the main markets in China are as follows:

On December 23, the price of SGCC 1.0 mm x 1,250 mm x C HDG was sold at RMB 5,450/mt ($821/mt), RMB 5,650/mt ($851mt) and at RMB 5,320/mt ($801/mt) in Shanghai, Guangzhou and Boxing markets respectively. Meanwhile, also on December 23, prices of SGCC 0.5 mm x 1,000 mm x C HDG were at RMB 5,500/mt ($828/mt) in the Shanghai market, RMB 6,050/mt ($911/mt) in Guangzhou and RMB 5,550/mt ($836/mt) in the Boxing market. The above prices include 17 percent VAT (US$1 = RMB 6.64).

Viewing the major markets in China, prices have been trending up steadily in Shanghai, with a good volume of transactions concluded. Angang Steel Company Limited and Benxi Steel Group published their prices for January, with HDG prices increasing by RMB 100-200/mt ($15-30/mt), reaching the levels of prices in November this year. Traders expect that prices will continue to rise in 2011. New arrivals in the Shanghai market consisted of November and December production materials and the higher costs of these materials provide support for market prices. Most traders were seeking to increase prices, but some traders have nevertheless been cautious about pushing up their price levels.

In the Guangzhou market, HDG prices were influenced by upstream steel products. Prices moved up but the transaction volume was not as good as before. Market players have started to adopt a wait-and-see stance. According to traders, Yichang Three Gorges Quantong Coated and Galvanized Plate Co.,Ltd products has high levels of inventory, which may influence the market for 1.0 mm and above sizes. Generally, however, inventory in the Guangzhou HDG market ,is at normal levels, and traders say they are not under much pressure from inventory at present.

In the Boxing market, during the past week HDG prices increased by RMB 100-150/mt ($15-22/mt), with the profit margin for some materials at RMB 100/mt ($15/mt). The price increases were caused by higher costs, while demand was low and no improvement has been seen in the transaction situation. Many traders consider it will be difficult for local prices to increase further.