Ex-China HDG offers have indicated further declines over the past week, and it is likely that high allocations and inventories will keep putting pressure on prices in the near future even though the downward trend in the local market has paused.
Specifically, offers from large Chinese mills stand at $600-605/mt FOB for August shipment, but some small Chinese mills and traders have cut their prices to $590/mt FOB, versus $595/mt FOB last week.
As a result, the SteelOrbis reference price for ex-China Z120 HDG has settled at $590-605/mt FOB, down by $5-25/mt over the past week as a few mills have withdrawn the high “unrealistic” prices seen since June.
During the given week, HDG prices in the Chinese domestic market have seen rises amid increasing HRC futures prices. The state-owned big mills have kept their offer prices stable, while private steel mills were able to allow some negotiating room on HDG prices. Transaction activities have been quiet in the given week amid frequent severe convective weather. Demand for HDG from downstream users has been slack, resulting in slightly increasing inventories, which have negatively affected prices. Currently, since typhoon Bavi is approaching, cautious sentiments prevail among market players. It is thought that HDG prices in the Chinese domestic market will come downward pressure in the coming week.
Average 1.0 mm SGCC hot dip galvanized spot prices in China have gained RMB 7/mt ($1.0/mt) compared to July 2, standing at RMB 4,017/mt ($590/mt) ex-warehouse, according to SteelOrbis’ information.
As of July 9, HRC futures at Shanghai Futures Exchange are standing at RMB 3,298/mt ($484/mt), decreasing by RMB 15/mt ($2.2/mt) or 0.46 percent since July 2, while increasing by 0.12 percent compared to the previous trading day, July 8.
$1 = RMB 6.8088
