Li Zhongshuang: The board market will mainly fluctuate in the short term
Since June, the domestic cold and hot-rolled coil market has generally operated steadily, with demand remaining weak, market transactions sluggish, and cold and hot-rolled coil prices fluctuating slightly. Traders remain cautious about the future market. On June 6, Li Zhongshuang, general manager of Shanghai Ruikun Metal Materials Co., Ltd., said in an interview with a reporter from China Metallurgical News that the cold and hot-rolled coil market is expected to mainly fluctuate in the short term.
Data shows that in late May, the price of Q235B hot-rolled coils in Shanghai fell by 100 yuan/ton, and the price of SPHC hot-rolled coils fell by 90 yuan/ton. In early June, the price of 5.5 mm hot-rolled coils in Shanghai rose by 40 yuan/ton, and the price of 1.0 mm cold-rolled coil rose by 20 yuan/ton. "Currently, although downstream demand is generally weak and steel inventory has increased, steel production has not significantly contracted due to the fact that steel enterprises still have a certain profit margin." Li Zhongshuang said that currently, the steel market the basic situation of strong supply and weak demand remains unchanged.
“During this period, downstream users have been cautious in their purchases, mostly based on rigid demand, and traders' business has been sluggish. Some businesses have chosen to accept customer price negotiations and offer discounts on steel transaction prices in order to achieve sales and recover funds, leading to a more common phenomenon of hidden price reductions in cold and hot-rolled coils.” Li Zhongshuang believes that the cold and hot-rolled coil market will be difficult to see a significant improvement in the short term, mainly due to the following reasons:
First, the supply pressure in the cold and hot-rolled coil market still exists. Currently, driven by the profit effect, steel enterprises are not strongly willing to reduce production. According to statistics, as of May 23, the profitability of sample steel enterprises was 59.74%, a slight increase of 0.43 percentage points week-on-week. Data from the China Iron and Steel Industry Association shows that in late May, among the six major regions in the country, except for the key statistical steel enterprises in North China and Southwest China, whose daily steel output decreased compared with the previous ten days, other regions showed varying degrees of growth. The continued growth in steel production will lead to increased supply pressure in the steel market, including cold and hot-rolled coils, which may lead to further price declines in cold and hot-rolled coils in the later period.
Second, the demand for cold and hot-rolled coils remains weak. Entering June, the southern region has entered the rainy season, while the northern region has ushered in high temperatures. Weather factors directly affect the construction progress of construction sites and also affect the production rhythm of the manufacturing industry, suppressing the release of downstream demand.
In addition, the current international tariff disputes are still ongoing. The White House announced that starting June 4, it will increase tariffs on steel imported from all trading partners except the United Kingdom aluminum products from the current 25% to 50%. The Ministry of Commerce stated that the US side has once again increased tariffs on steel, aluminum and their derivatives, which is not only harmful to both sides and unhelpful to maintaining industrial safety, but will also seriously disrupt the stability of the global industrial chain and supply chain.
Li Zhongshuang predicts that overall, the pattern of strong supply and weak demand in the cold and hot-rolled coil market will be difficult to change in the short term, and the supply-demand contradiction of sheet materials may further intensify in June.
Third, the rigid cost support has weakened. Recently, iron ore 、 coke and other raw materials for steel have continued to weaken. According to statistics, as of May 28, the ex-factory price of ordinary carbon square billets in Tangshan, Hebei Province was 2900 yuan/ton, a decrease of 40 yuan/ton compared with the previous period; in Jiangsu Province, scrap steel prices were 1980 yuan/ton, down 40 yuan/ton compared with the previous period; in Shanxi Province, the price of first-class coke was 1100 yuan/ton, down 100 yuan/ton compared with the previous period; and the price of 61.5% Australian powder ore (Shandong Qingdao Port) was 733 yuan/ton, down 29 yuan/ton compared with the previous period. The decline in the prices of raw materials for steel has weakened the rigid cost support, making it difficult to support the price increase of cold and hot-rolled coils in the later period.
