Late hot and cold plate market price consolidation

Recently, domestic market prices for hot and cold coils continue to fall. There does not seem to be any signs of a stable rebound. Operators are not optimistic about the market outlook. Li Zhongshen, general manager of Shanghai Ruikun Metal Materials Co., Ltd., which specializes in plate trading, believes that short-term The price of the inner hot and cold plate market is still hard to rebound and recover.

According to Li Zhongshuang’s recent research on the operation status of the HRC market, the price of hot-rolled coils in Shanghai fell by RMB 60/t this week, and the market price of cold-rolled coils dropped by RMB 40/t. Reasons for the price drop: flat steel demand, no significant reduction in steel production, falling iron ore and coke prices, further reduction in steel prices, the market no obvious positive factors, the spot market prices fell further, but the price is very low The price of the cold and hot coil market is expected to be dominated by consolidation in the later period.

This weekend, the Shanghai market's opening price of Baosteel heat coil (SPHC): 1.8mm offer 3820 yuan / ton; 2.0mm offer 3770 yuan / ton; 2.75mm offer 3610 yuan / ton; 3.0mm offer 3590 yuan / ton; Quote 3590 yuan / ton; 1.8mm offer 3560 yuan / ton; Bengang hot coil production (Q235B) offer 4.75mm offer 3540 yuan / ton. The open price of cold rolled steel plate (DC01) of this steel: quoted price is 4620 yuan/ton for 0.8mm; 4,570 yuan/ton for 1.0mm; 4,550 yuan/ton for 1.2mm; 4,530 yuan/ton for 1.5mm.

According to some operators' analysis, the hot and cold plate market could not get rid of the weak and sluggish operating situation in May. The transaction was light and the price has been in a downtrend channel. There is no sign of a steady decline. The key to the formation of such a pattern is the oversupply of the hot and cold plate market, the lack of demand, and the contradiction in supply exceeding demand, resulting in the recent decline in the price of hot and cold plate market, which continues to be overcast. According to statistics, from January to April this year, the output of hot-rolled coils and cold-rolled coils in China was 59.907 million tons and 21.510 million tons, an increase of 9.6% and 9.2% over the same period of last year; the output in April was 14.771 million tons and 5.515 million respectively. Tons, an increase of 4.9% and 7% year-on-year, respectively, and daily average production of 492,400 tons/day and 183,800 tons/day, respectively, continued to maintain a relatively high level.

Steel mill production capacity continues to release, output continues to grow, sales are sluggish, orders are reduced, and inventory levels are high. According to information obtained by some steel traders from steel mills, nowadays, the stock pressure of steel mills has increased. Some steel mills pile steel products and look for warehouses everywhere, which shows that the high inventory of steel plants has brought sales pressure. However, the steel mills did not reduce production or limit production. Even if they lost money, they did not take the initiative to reduce production. Instead, they “price-for-price”, cut prices, and a number of large-scale steel companies introduced the June pricing policy for hot rolled coils and cold. The price of rolled coils is reduced by RMB 150-250/ton, and at the same time, the contract resources in April and May are given a certain amount of compensation to attract steel traders and end-users to place orders.

In addition, the market price of steel raw materials continued to fluctuate and fell, the pressure on production costs of steel mills eased, and the rigid cost support power weakened. The prices of iron ore, coke, scrap steel and other steel raw materials have been declining recently. This week domestic iron ore prices continue to fall by RMB 20-40/ton, coke prices have dropped by RMB 20-30/ton, and scrap prices have dropped by RMB 20-30. / Ton, due to the fall in raw material prices, steel production costs have also dropped accordingly. According to statistics, steel production costs have fallen by 50 yuan/ton or more, and steel mills have made some profits. Therefore, the willingness to cut production is not strong. Even if some steel mills still lose money, the cost after the production stoppage will increase, the pressure will be greater, and the steel mills will cut production and losses. The more serious. If the converter is to stop the furnace, how much will it cost to reopen the furnace; again, the steelmaking furnace will be stopped, the rolling mills will be operating, and so many workers will do it. Therefore, reducing production and stopping production is not a simple matter for steel mills. The more they reduce production, the more they lose. Therefore, steel mills would rather cut their prices and sell steel, rather than stop the furnace from reducing their output. This is the reason that steel production continues to remain high.

From the perspective of downstream end-users' demand for hot and cold plates, the current manufacturing industry is sluggish and production and sales are poor. HSBC’s initial manufacturing PMI fell to 49.5% in May, returning to a contractionary range, indicating a weak recovery in the domestic economy and increasing downward pressure on the economy in the future. In May and June, it was the off-season of production of automobiles and home appliances. The purchasing plans of key downstream enterprises of thin plates showed a declining trend compared with the same period of last year. In particular, the shrinking of orders in the home appliance industry was obvious, which was not unrelated to the real estate regulation and the exit of home appliance stimulus policies.

The market demand is hard to increase, but the output of the steel mills will increase if it does not decrease, and the pattern of oversupply will remain the same. Therefore, in the short term, domestic cold and hot coil market prices will continue to consolidate downward, and it is difficult to rebound and rise.