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The slowdown in export business is forcing producers to lower prices to lure customers.
Prevailing base export prices for HDG have fallen to $680 per tonne fob for August shipment, down $10-15 from those for July delivery, according to trading sources.
“Steelmakers are trying to ship more products to the overseas market with competitive prices since domestic demand from auto producers have been dropping,” a major trader in Shanghai said.
China automobile production in June totalled 1.53 million vehicles, a 2.37% drop from the previous month, while sales amounted to 1.57 million units, a 1.66% month-on-month slide, figures from the China Assn of Automobile Manufacturers show.
Auto production and sales have been decreasing for three consecutive months.
The decrease in June led to lower consumption of galvanised steel and lower sales prices for the product as well.
In Shanghai, 1mm HDG is being traded at 4,920-4,980 yuan ($779-788) per tonne, 20 yuan lower than last week.
Baosteel’s 100 yuan per tonne cut in its galvanised steel prices for August shipment reflects the soft market.
Large drops in hot rolled coil and cold rolled coil prices are also pushing down HDG prices since they lower production costs for galvanised coil, market participants said.