Cold-Rolled and Hot-Rolled Coil Market

 

Short-Term Outlook for the Cold-Rolled and Hot-Rolled Coil Market

Market Overview

In the short term, the prices of cold-rolled and hot-rolled coils are expected to experience minor fluctuations. According to Li Zhongshuang, general manager of Shanghai Ruikun Metal Materials Co., Ltd., the market is currently cautious.

Recent Market Trends

On May 31, Li Zhongshuang discussed recent market trends with China Metallurgical News. He noted that the price of hot-rolled coils in Shanghai has risen significantly, while cold-rolled coil prices have slightly declined. Despite these changes, steel traders report slow sales, with most transactions concentrated on lower-priced resources. High-priced resources face shipping difficulties, and downstream end users are cautious in their purchasing.

Future Market Conditions

Li Zhongshuang believes that the cold-rolled and hot-rolled coil markets will continue to operate with slight fluctuations in the short term.

Demand Perspective

Demand for steel remains weak. The manufacturing sectors, including automobiles and home appliances, have not shown significant improvement, with production and sales continuing to decline. According to the Passenger Car Market Information Joint Conference, domestic retail sales of narrow passenger cars in May were about 1.65 million units, a year-on-year decrease of 5.3%.

Government policies, such as the "Implementation Rules for Automobile Trade-in Subsidies" and local scrapping and renewal policies, aim to boost the automobile market. However, the impact of these policies has yet to be seen as it takes time for scrapping to translate into new car purchases. Consequently, the demand for cold-rolled and hot-rolled coils remains weak, limiting the potential for price increases.

Supply Perspective

Market supply has remained strong. Production restrictions and controls by steel companies have not significantly reduced output. Data from the China Iron and Steel Association shows that in mid-May, key steel enterprises produced 22.0922 million tons of crude steel, 19.7868 million tons of pig iron, and 21.2007 million tons of steel. The average daily output of crude steel reached 2.2092 million tons, a month-on-month increase of 0.81%.

Social inventories of cold-rolled and hot-rolled coils have also grown. As of May 24, inventories of hot-rolled coils in 29 key cities reached 2.8508 million tons, a month-on-month increase of 0.63% and a year-on-year increase of 10.02%. Cold-rolled coil inventories were 1.4874 million tons, a month-on-month increase of 3.27% and a year-on-year increase of 25.36%. This indicates significant supply and inventory pressures.

Cost Perspective

The prices of steel raw materials such as iron ore, coke, and scrap steel have fluctuated recently. As of May 24, the price of 61.5% PB powder in Qingdao Port, Shandong Province, was 886 yuan/ton, up 5 yuan/ton from the previous month, remaining at a high level. A new round of price cuts for coke saw a drop of 100 yuan/ton to 110 yuan/ton, while scrap steel prices increased by 30 yuan/ton to 60 yuan/ton.

Li Zhongshuang mentioned that the high prices of steel raw materials maintain production cost pressures on steel enterprises. Therefore, when determining the ex-factory price of steel, the main focus is on supporting prices. Some large steel companies raised the base price of hot-rolled coils by 50 yuan/ton in June, which helped curb sharp drops in market prices for cold-rolled and hot-rolled coils.

Conclusion

The cold-rolled and hot-rolled coil market is expected to experience small fluctuations in the short term due to strong supply and weak demand. Prices will be influenced by market conditions, supply and inventory levels, and raw material costs. As the market adjusts to these factors, minor fluctuations are likely to dominate.

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