China's home appliance production regained some lost ground by the end of June after output slumped at the start of the year due to the COVID-19 pandemic, data from China's National Bureau of Statistics showed, which helped to support hot-dip galvanized coil prices.
Production of air conditioners, washing machines, freezers and refrigerators over January-June dropped 11.4% year on year, narrower than the 17.1% drop posted for January-May and less than a third of the 35.0% decline seen for January-February, the data showed.
One factor behind the narrower fall was China's economy, which has expanded recently as shown by the manufacturing purchasing managers’ index published by Chinese media company Caixin, which rose to 51.2 points in June from 50.7 in May.
The white goods sector accounts for nearly 2% of China's total steel consumption, consuming mainly HDG and cold-rolled coils.
Chinese domestic HDG prices on Shanghai's spot market as of July 1 increased 2.3% month on month to Yuan 4,400/mt ($631/mt), S&P Global Platts assessments showed.
Further gains are expected as the China Household Electrical Appliances Association has laid out a plethora of measures to boost consumption of home appliances until the end of October, such as subsidizing replacement purchases.
Market sources expect more stimulus policies to emerge for the rest of the year to further stimulate consumption and support steel demand.
-- Analyst Sylvia Cao