Li Zhongshuang: The cold and hot rolled sheet market will consolidate in the short term.
Recently, the cold andhot rolledsheet market in our country has shown a trend of stability, with little change in the market trading atmosphere, and steel traders generally hold a cautious attitude towards the future market. On January 10, Li Zhongshuang, general manager of Shanghai Ruikun Metal Materials Co., Ltd., stated in an interview with "China Metallurgical News" that the cold and hot rolled sheet market is expected to operate in a consolidation phase in the short term.
"Affected by the sharp decline in steel prices, the profits of steel companies have significantly shrunk, and some companies are suffering serious losses. In this situation, both steel companies and traders have a strong willingness to support prices," Li Zhongshuang said, especially when steel companies determine the ex-factory prices, they generally choose to support prices, which largely curbs the significant decline in steel prices in the future.
Second, the supply pressure in the cold and hot rolled sheet market is not large. Recently, there has been an increase in production stoppages and maintenance among steel companies. According to incomplete statistics, some companies will conduct annual maintenance on their No. 4 blast furnace from December 28, 2024, to January 28, 2025, for a period of 31 days, which is expected to affect the average daily output by 0.63 million tons; some companies will stop production and maintenance on their 1800 cubic meter blast furnace starting from January 2; and some companies will stop production and maintenance on their 1280 cubic meter blast furnace starting from January 10, which is expected to affect the average daily output by 0.8 million tons.
Li Zhongshuang stated that due to factors such as increased production stoppages and maintenance, steel production has not significantly increased recently. From the latest released PMI (Purchasing Managers' Index) of China's steel industry, in December 2024, the PMI of the steel industry was 47.5%, a decrease of 3.1 percentage points month-on-month, falling into the contraction range after running in the expansion range for two consecutive months, indicating that the steel industry has entered the traditional off-season. Among them, the production index was 48.3%, a month-on-month decline of 5.3 percentage points.
Currently, the resources released by steel companies into the market are not abundant, and the social inventory of cold and hot rolled sheets remains low. According to statistics, as of January 5, the inventory of hot rolled sheets in 35 major markets across the country was 2.2664 million tons, a decrease of 14,200 tons week-on-week, down 0.62%; the inventory of cold rolled sheets was 1.0203 million tons, an increase of 2,400 tons week-on-week, up 0.24%. "Currently, some specifications still have shortages, which is beneficial for stabilizing the cold and hot rolled sheet market in the future," he said.
Third, the effects of macro policies are becoming apparent, and demand remains resilient. Recently, the production and sales of the automotive and home appliance manufacturing industries have maintained a growth trend, injecting momentum into the demand for cold and hot rolled sheets. In 2024, driven by the old-for-new subsidy policy, China's home appliance consumption market is gradually warming up, with annual sales reaching a new high in recent years. It is estimated that in 2024, the scale of China's home appliance market will reach 900 billion yuan. As of December 28, 2024, more than 7 million people have participated in the old-for-new program for home appliances and furniture. During the implementation of the policy, a total of 1.728 billion yuan in subsidies has been issued nationwide.
Li Zhongshuang expects that in 2025, the production and sales of China's automotive and home appliance manufacturing industries are expected to maintain a growth trend, which is beneficial for increasing the demand for cold and hot rolled sheets and driving steel prices to stabilize upwards.
