Ex-China hot dip galvanized (HDG) prices have remained stable this week. At the same time, although HRC futures prices have been recovering this week, local HDG prices have moved down amid slow demand, affected by cold weather and the approaching holidays in China.
Specifically, offers from large mills are still heard at around $725-730/mt FOB for March shipment, moving sideways compared to last week. Meanwhile, the reference deal prices for ex-China Z120 HDG have been heard at around $688-710/mt FOB, remaining relatively stable as compared to last week.
During the given week, HDG prices in the Chinese domestic market have indicated slight declines amid transportation being negatively affected by the snowy weather, which resulted in decreasing transaction activities. Demand for HDG has been slack due to the cold weather and the approaching Chinese New Year holiday (February 9-16), which will contribute to rising inventory levels. However, on January 24, the People’s Bank of China officially announced that the reserve requirement ratio (RRR) will be cut by 0.5 percentage points on February 5, which will release RMB 1 trillion ($139 billion) in long-term liquidity to the market and will likely bolster the steel market.
Average 1.0 mm SGCC hot dip galvanized spot prices in China have lost RMB 17/mt compared to January 18, standing at RMB 4,780/mt ($673/mt) ex-warehouse, according to SteelOrbis’ information.
As of January 25, HRC futures prices at the Shanghai Future Exchange are standing at RMB 4,097/mt ($567/mt), increasing by RMB 67/mt ($9.4 /mt) or 1.7 percent compared to January 18, while indicating a rise of 0.79 percent compared to the previous trading day (January 24).
$1 = RMB 7.1044