Ex-China hot dip galvanized (HDG) offer prices have edged up over the past week, but demand has been very limited and the fall in futures prices has caused local buyers in China to stay out of the market, waiting for further developments.
Offers from mills this week are at $840/mt FOB for late May shipment, edging up by $10/mt compared to March 9 on average. Reference deal prices for ex-China HDG have been heard at $800-810/mt, FOB, rising by $5/mt compared to last week.
“The relevant governments departments have repeatedly issued risk warning following continuous rises in iron ore prices, exerting a negative impact on market sentiment and resulting in big declines in ferrous metal futures prices since March 15,” an international trader said.
As of March 16, HRC futures prices at the Shanghai Future Exchange are standing at RMB 4,310/mt (625/mt), decreasing by RMB 92/mt ($13.3/mt) or 2.1 percent since March 9.
During the given week, HDG prices in the Chinese domestic market have moved up amid the decreasing inventory levels in the spot market as demand from downstream users has improved. However, following continuous rises in steel prices and iron ore prices, the authorities have issued risk warnings, raising concerns among market players. For instance, HRC futures prices saw a big drop of 3.51 percent on March 16, while iron ore futures prices indicated a decline of 2.8 percent on the same day. Steelmakers’ production outputs will increase after the two sessions meetings held in Beijing, which may exert negative pressure on the HDG market from the supply side. It is thought that HDG prices in the Chinese domestic market may fluctuate within a limited range in the coming week.
Average 1.0 mm SGCC hot dip galvanized spot prices in China have gained RMB 47/mt ($6.8/mt) compared to March 9, standing at RMB 4,977/mt ($721/mt) ex-warehouse, according to SteelOrbis’ information.
$1 = RMB 6.9149
