The cold and hot rolled coil market will experience volatile adjustments in the near future.
Recently, the domestic cold, hot-rolled coil market has slightly improved, cold and hot-rolled coil prices have slightly fluctuated upward. On August 22, Li Zhongshuang, General Manager of Shanghai Ruikun Metal Materials Co., Ltd., said in an interview with China Metallurgical News that steel traders generally hold a cautious attitude towards the future market, expecting the cold and hot-rolled coil market to mainly experience slight fluctuations and adjustments in the short term.
Li Zhongshuang introduced that in mid-August, the price of hot-rolled coils in the Shanghai market rose by 40 yuan/ton, cold-rolled coil prices increased by 30 yuan/ton. He analyzed that due to the recent strengthening expectations of "anti-involution" and capacity control, combined with the rebound in steel raw material prices, steel prices have gained new support.
"During this period, the trading conditions of the cold and hot-rolled coil market have improved. Although end users remain relatively cautious and mainly purchase out of rigid demand, the demand intensity has increased and the release speed has accelerated." Regarding the future trend of the cold and hot-rolled coil market, he believes that in the short term, there is insufficient momentum to support further price increases, and steel prices have risen too quickly in a short time, with a risk of turning downward later.
Currently, the cold and hot-rolled coil market is still in a "strong supply and weak demand" pattern. Data from the China Iron and Steel Association shows that in early August, the average daily crude steel output of key steel enterprises reached 2.074 million tons, a 4.7% increase over the previous ten days and a 3.6% increase year-on-year; the average daily steel output of key steel enterprises reached 2.005 million tons, a 4.1% decrease over the previous ten days but a 9% increase year-on-year; key steel enterprises' pig iron average daily output reached 1.914 million tons, a 3.2% increase over the previous ten days and a 3.9% increase year-on-year. At the same time, steel inventories are also increasing. Data shows that in early August, the steel inventory of key steel enterprises reached 15.07 million tons, an increase of 290,000 tons over the previous ten days, a 2% rise. Both steel production and inventory increased, leading to more resources released to the market, maintaining the "strong supply" pattern.
At the same time, the market's "weak demand" pattern has not changed significantly. Recently, the manufacturing industry's production and sales conditions, which consume a large amount of cold and hot-rolled coils, have been poor. In the automotive sector, data from the Passenger Car Market Information Joint Conference shows that in early August, the national retail sales of passenger cars reached 452,000 units, a 4% decrease year-on-year. In the home appliance sector, production has also declined. According to the production plans of home appliance companies for September, air conditioner production is planned at 5.625 million units, a 7.8% decrease year-on-year; export production is planned at 5.025 million units, a 16.6% decrease year-on-year. Li Zhongshuang analyzed that air conditioner exports have shown a significant decline due to the end of overseas restocking cycles, tariff policies, and geopolitical risks. In addition, refrigerator export growth has also slowed, mainly because the European market's restocking demand is nearing its end; washing machine export growth has slowed since the third quarter, with expected export volume reductions within the year. Based on this, it is expected that the demand for cold and hot-rolled coils from the home appliance manufacturing industry will decrease in the future.
Li Zhongshuang believes that under the "strong supply and weak demand" pattern, cold and hot-rolled coil prices are more likely to fall than rise. Considering the recent rise in steel raw material prices, the downward space for cold and hot-rolled coil prices is limited. On August 13, some regions' coke enterprises initiated coke prices the 7th round of price increases, with cumulative domestic coke price increases reaching 300 to 330 yuan/ton. scrap steel prices continue to run strong, with cumulative increases of 10 to 30 yuan/ton. imported iron ore market first rose then fell, Qingdao Port in Shandong 61.5% PB fines quoted at 772 yuan/ton, a weekly increase of 1 yuan/ton.
"With support from steel raw material prices, steel companies generally adopt a price-holding policy when setting steel ex-factory prices. The prices of cold and hot-rolled coils released to the market later will also rise, which determines that the prices of cold and hot-rolled coils will not fall significantly later and will mainly operate in a consolidating manner," Li Zhongshuang said.
