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SunSirs: Demand Release Is Less than Expected, Hot Rolled Coil Prices Are Mostly Falling with Costs
September 23 2020 07:33:12SunSirs(John)

According to the price monitoring of SunSirs, the price of hot rolls has fluctuated downward since September, as shown in the figure above. As of September 20, the hot rolled coil price of SunSirs was 3,917.5 RMB/ton, a month-on-month decrease of 4.04%. There are two main factors that affect the downward trend of hot rolled coil: First, the downward price of the cost side is transmitted to the finished product. Second, the release of downstream demand is not as expected, and the peak season market is overdrawn in advance.

Looking at the cost side first, according to the monitoring data of SunSirs, from August 23 to September 20, the price of iron ore fell by 2.57%, and the price of hot rolled coil fell by 4.04%. Before September 7, changes in hot rolled coil prices basically followed changes in iron ore prices. After the 7th, the range of changes between the two gradually increased, but there was no difference in the basic upward and downward trends.

Looking at the demand side, we mainly look at the changes in the inventory of hot rolled coil. According to relevant online data, the total number of hot rolled coil social warehouses has maintained a growth trend from the end of August to early September. It only fell after reaching a high point on the 7th. Inventory began to grow again a week later. As of September 21st, the hot-rolling social library reached 2,128,600 tons. The total inventory continued to increase, indicating that the actual downstream demand release was less than expected, market transactions were not good, and merchants’ mentality was frustrated, thus adjusting prices to promote transactions. .

It can be seen that when the demand did not improve significantly in the early stage, the price of hot rolled coil mostly followed the trend on the cost side, while the downstream demand was weak, and the market transaction situation was less than expected, and the inventory pressure became more prominent, causing the price of hot rolled coil to fall further, and the downward range also followed the trend of the cost side.

Market outlook

To sum up, if the demand situation still does not improve in the future, under the condition of increasing inventory pressure, after this round of price declines, merchants should focus on sales operations, but the willingness to price will begin to strengthen, and it is expected that the price of hot rolled coil may fluctuate mainly in the short term.

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