Coil market price trend differentiation

Since 2022, the cold and hot-rolled coil market transactions have been flat, and steel traders have accelerated their shipments, and they are generally cautious about the market outlook. On January 20, Li Zhongshuang, general manager of Shanghai Ruikun Metal Materials Co., Ltd., said in an interview with a reporter from China Metallurgical News that under the circumstances of stable growth policies, rising costs and declining steel inventories, it is expected that hot rolled coils will be rolled out in the short term. The price of plate will be mainly stable, and the price of cold-rolled coil will fluctuate slightly.

According to Li Zhongshuang, since the beginning of this year, the cold and hot rolled coil market has not been running smoothly, with prices fluctuating, rising and falling, showing differentiation. At present, the hot-rolled coil market is characterized by “weak supply and demand”. It is expected that the week before the Spring Festival will be stable, while the cold-rolled coil market will fluctuate slightly.

Judging from the market transaction situation, steel traders generally feel that sales are not smooth, and downstream users basically purchase on demand. Some merchants choose to sell at lower prices in order to ship more, resulting in a common phenomenon of “secret drop” in steel prices. However, on the whole, the mentality of steel traders is basically stable, and there are still expectations for the cold and hot rolled coil market this year.

Li Zhongshuang believes that the cold and hot-rolled coil market will maintain the current operating situation in the short term. Affected by factors such as “price but no market” during the Spring Festival, the price of cold and hot-rolled coil is basically stable recently, and it is expected to stabilize and strengthen after the Spring Festival.

First, the production and sales situation of downstream end users has improved, and the demand intensity is expected to increase. Taking the automobile industry as an example, in December 2021, the production and sales situation of the automobile industry improved, the production and sales volume increased month-on-month, the output growth rate changed from negative to positive, and the sales volume decreased by 7.5 percentage points month-on-month. Entering 2022, the auto industry is off to a good start, with production and sales continuing to climb. Statistics from the Passenger Vehicle Market Information Association show that in the first week of January this year, the average daily retail sales of my country’s overall narrow passenger vehicle market reached 58,000 units, an increase of 6% year-on-year and a month-on-month increase of 27%. The China Association of Automobile Manufacturers predicts that my country’s auto sales will reach 27.5 million in 2022, a year-on-year increase of about 5%. Some industry analysts believe that the demand for steel in the automotive industry in 2022 will be about 56 million tons, a year-on-year increase of 2.8%.

Second, the inventory pressure of cold and hot-rolled coils is not great. Statistics show that as of January 14, the inventory of hot-rolled coils in 35 major markets across the country was 2,196,200 tons, a decrease of 11,900 tons or 0.54% from the previous week; the inventory of cold-rolled coils was 1,212,500 tons. , a decrease of 1,500 tons or 0.12% from the previous week.

Third, the rigid cost supports the price of cold and hot-rolled coils to be stable and strong. Recently, the prices of iron ore, coke, scrap steel and other raw materials for steel have continued to rise. For example, on January 20, the Platts index price of 62% imported iron ore was US$133.7/ton, an increase of US$14.2/ton from US$119.5/ton at the beginning of this year. Due to the rising price of steel raw materials and fuels, the cost pressure of steel enterprises has increased, so the policy of formulating steel ex-factory prices is basically based on price support, which forms a strong support for the stabilization of steel prices. 

Post time: Feb-15-2022