Li Zhongshuang: The year-end board market will be caught in a "supply-and-demand tug-of-war."
As the year-end approaches, domestic cold, Hot Rolling The off-season characteristics of the coil steel market are becoming increasingly evident, with weak demand, sluggish trading, and volatile price movements. Steel traders remain largely cautious about the outlook ahead.
On November 21, Li Zhongshuang, General Manager of Shanghai Ruikun Metal Materials Co., Ltd., predicted in an interview with a reporter from China Metallurgical News that the year-end market for both cold- and hot-rolled coil products will likely remain consolidating, potentially entering a "supply-and-demand tug-of-war."
Data shows that in early to mid-November, the 5.5mm hot-rolled product in the Shanghai market Coil plate prices It dropped from 3,331 yuan/ton to 3,285 yuan/ton, a decrease of 46 yuan/ton; 1.0 mm Cold Rolling The price of coil steel dropped from 3,870 yuan/ton to 3,841 yuan/ton, a decrease of 29 yuan/ton. Li Zhongshuang noted that recently, trading activity in both the cold- and hot-rolled coil markets has been rather sluggish, with downstream users showing weak purchasing intentions. Aside from essential demand, most buyers are adopting a wait-and-see approach, resulting in transactions primarily involving lower-priced resources. To facilitate sales, some traders have even chosen to accommodate customer negotiations, further driving down the actual transaction prices of cold- and hot-rolled coils.
Regarding the future trends in the cold- and hot-rolled coil markets, Li Zhongshuang believes that as we enter the off-season, prices for both types of coils are unlikely to experience significant fluctuations in the short term. The likelihood of a volatile, roller-coaster-like market movement is relatively low, and prices are expected to remain largely stable instead. The main reasons for this outlook include the following:
First, the situation of weak demand is unlikely to change in the short term. Recently, production and sales in manufacturing sectors such as automobiles and home appliances have declined somewhat. According to data from the China Passenger Car Association, retail sales in the national passenger car market reached 415,000 units in early November, a year-on-year drop of 19%. Notably, retail sales in the new-energy vehicle segment hit 265,000 units during the same period, marking a year-on-year decline of 5%.
According to industry research, steel demand in the manufacturing sector is expected to weaken overall in November, with declining orders from key downstream industries such as automotive and home appliances. Statistics show that China's production of air conditioners, refrigerators, and washing machines fell by 5% month-on-month in November, sharply contrasting with the growth trend seen during the same period over the past three years. This decline was primarily driven by weaker-than-expected retail sales at the consumer end, as well as the phasing out of "New Two" subsidy policies in many regions.
In the real estate sector, data from the National Bureau of Statistics show that, in the first 10 months of this year, nationwide real estate development investment reached 7.3563 trillion yuan, a year-on-year decrease of 14.7%. Among this, residential investment totaled 5.6595 trillion yuan, down 13.8% from the same period last year.
During the first 10 months of this year, the area of housing under construction hit 652.939 million square meters, marking a 9.4% drop compared to the previous year. Meanwhile, the area of newly started housing projects fell by 19.8% year-on-year to 49.061 million square meters, while the completed housing area declined by 16.9% to 34.861 million square meters.
Li Zhongshuang predicts that the weak demand for both cold- and hot-rolled coil products is unlikely to improve by year-end.
Second, it will be difficult to quickly ease supply pressures in the short term. Although environmental regulations and production line maintenance have already exerted some impact on supply during this period, steel output has remained stubbornly high overall. In particular, recently, several steel companies in North China that had completed their maintenance schedules have gradually resumed production. Meanwhile, given that producing hot-rolled coil plates continues to yield reasonable profits, steelmakers remain highly motivated to keep manufacturing, leading to an increase rather than a decline in steel output—and consequently, steel inventories have also begun to rise.
Data from the China Iron and Steel Association shows that in the first ten days of November, key statistical steel enterprises collectively produced 19.26 million tons of crude steel, averaging 1.926 million tons per day—a 6.0% increase compared to the previous ten-day period. Meanwhile, the total steel inventory held by these key enterprises reached 15.49 million tons during the same period, rising by 860,000 tons (a 5.9% increase) from the previous ten-day period. This figure is also 3.12 million tons higher than at the beginning of this year, representing a 25.3% rise, and marks a 1.83 million-ton, or 13.4%, year-on-year increase. Li Zhongshuang believes that, in the short term, resources entering the market will not decline significantly, suggesting that supply remains at a high level—conditions that are expected to intensify sales pressure on steel traders in the coming period.
Third, prices of iron and steel raw materials experienced volatile fluctuations. In early November, these prices generally moved in a choppy manner. Looking at them individually: Scrap steel prices Slight decline, November 10, Scrap steel The benchmark price is 2,394.50 yuan per ton, down 0.63% from early November. Imported iron ore prices Falling back to $85 per ton, with expectations that there is still room for further declines later on. Coke prices Stabilizing operations mean that, starting from 00:00 on November 10, multiple cities in Shandong Province plan to raise coking coal prices. Specifically, the price of wet-quenched coke will increase by 50 yuan per ton, while dry-quenched coke prices will rise by 55 yuan per ton. Although steelmaking raw material prices have recently shown divergent trends, cost pressures on steel products remain significant. Coupled with the recent contraction in steelmakers' profits, companies are increasingly inclined to support prices amid growing production controls and output restrictions. This, in turn, is expected to curb further price declines in the coming period. Steel prices A significant drop.
