After a sharp fall in August, the prices of galvanized steel stopped falling and rebounded in September, showing a "golden September" opening trend. The price rebound, on the one hand, is a cost-driven rise brought about by rising raw material prices; on the other hand, is a supply reduction rise brought about by the double decline in the market and steel plant inventory. Overall, the galvanizing market in September "reasonable price increase, space is still sufficient". As of September 16, the average market price of 1.0*1250*C hot-dip galvanized coil in Shanghai was 4616 RMB/ton, up 1.36% from the beginning of September and down 3.47% from the year's peak price.
In terms of raw materials, from the industrial chain chart of SunSirs, both hot-rolled coils and metal zinc have increased considerably since September, and zinc has increased 1.5 times as much as hot-rolled coils. From the production cost point of view, as the proportion of zinc production consumption is about 0.25% and the price cost is estimated to be 1.08%, the rising trend of hot rolled coil is still the main factor affecting the price galvanized sheet. On the other hand, because the current profit and cost pressures of galvanizing plants are still on raw material hot coils, the current price of hot coils is 3696 RMB/ton, while galvanized is 4616 RMB/ton, so theoretically the profit is still acceptable (about 400-500 RMB/ton), the production enthusiasm of steel plants remains unchanged, and galvanizing in September still has space to rise.
On the supply side, the data show that as of September 13, 31 of the 266 galvanized production lines in 130 galvanizing plants have been overhauled, with a decrease of 1 month-on-month; the operating rate of steel mills was 88.35%, an increase of 0.38% month-on-month; capacity utilization rate was 68.77%, down 0.10% month-on-month; and the average weekly output of steel mills in the past month was about 826,600 tons, a decrease of 1.7 thousand tons from the previous cycle. It shows that prices of galvanized sheet continued to fall in the second half of August, prompting galvanizing manufacturers to start reducing production operations to ease the market decline and support its price.
In terms of inventory, the data showed that as of September 13, the galvanized social inventory was 943,700 tons, up 2.4 thousand tons month-on-month, down 0.35 million tons on a week-on-week basis; steel mill inventory was 428,100 tons, down 24.4 thousand tons month-on-month, It was a continuous decline of 4 weeks, and set a new low level during the year. It shows that the galvanizing market is subject to the Mid-Autumn Festival holiday, and the market gets less goods, which leads to the accumulation of market stocks; while the steel mills continue to actively ship, so that the galvanized inventory is moved to the market. Therefore, it is expected that after the holiday, the price will rise at any time. Under the buying and selling trend, the market inventory consumption will increase, and the prices of galvanized sheet will continue to rise.
In summary, the galvanizing analyst from SunSirs believes that the current domestic galvanizing market fundamentals show a "supply and demand tightening" pattern, the overall market is strong. After the price rebounded at a low price, it began to gradually improve; although the galvanizing ex-factory price was generally flat in September, some steel mills also received good orders and slightly raised the factory price, so the overall demand for galvanized prices continued to rise. On the other hand, the current galvanized inventory is generally at a low level, while the steel mill start rate is still in the normal range, there is no obvious stop production, although most factories in the north have begun to stop work, the return to work after the National Day, but the overall market supply still declined.compared with the first half of the year. Therefore, it is expected that the overall galvanizing in September will be the main trend, and the average market price is expected to be 4640-4680 RMB/ton.
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