Over the past week, most downstream users in the Chinese domestic HDG market have only purchased volumes necessary to maintain their production operations, with the average HDG sales volumes of large traders at around just 800 mt per day. Many traders have been willing to negotiate on prices in actual transactions given the weak demand in the market, thereby negatively impacting market prices.
Although major domestic producer Baosteel has raised its HDG prices by RMB 200-220/mt ($31-35/mt) for April delivery, this has not had any significant impact on the spot market. Currently, traders' profit margins are being squeezed due to falling prices in the spot market and higher costs of ordering new materials, while they are also under pressure to sell materials and bring in funds in order to pay debts before the end of the first quarter.
It is thought that HDG prices in the Chinese domestic market will move down further in the coming week.