During the week ending January 29, Chinese domestic hot dip galvanized (HDG) prices have indicated a downward trend, with larger decreases seen for thin specifications, while transaction activity is still at low levels. Average HDG prices in the local Chinese market can be viewed in the SteelOrbis price reports section.
During the given week, market participants in the Chinese HDG market have been unwilling to build up inventories or replenish stocks, while at the same time steelmakers have not cut their production capacity utilization rates and so there is more pressure on them to sell at lower prices. Several steelmakers including Tangsteel, Ansteel and Tiantie Steel now allow traders to make payment after they have actually sold the materials they have bought. Meanwhile, Liaoning-based Benxi Iron and Steel and Beijing-based Shougang have cut their ex-works prices for HDG by RMB 200/mt ($32/mt) and 80/mt ($13/mt) respectively, exerting a negative impact on HDG spot prices. With the Spring Festival holiday (February 18-24) approaching, the HDG market will likely come under pressure from increasing inventory given the traditional slowdown of business activity. Traders are mostly pessimistic on the future prospects for the market. It is expected that HDG prices in the Chinese domestic market will likely continue their soft trend in the coming week.