SunSirs: Cold rolled sheet prices may rise first in March

Affected by social and public events during the Spring Festival of 2020, the national cold rolled prices fell sharply. Although there was a brief rally during the second half of the year, the overall market turnover was weak and prices fell again.

According to the monitoring of SunSirs price data, as of February 28, the average cold rolled coil market price of 1.0 * 1250 in Shanghai was 4227.50 yuan / ton, a 6.78% drop from the beginning of the month and a 2.03% year-on-year drop. Among them, Benxi Iron and Steel is 4,150-4200 yuan / ton, Anshan Iron and Steel is 4,280-4400 yuan / ton, Maanshan Iron and Steel is 4,180-4250 yuan / ton, and Wuhan Iron and Steel is 4,150-4350 yuan / ton. Due to logistics and output, Wuhan Iron & Steel has relatively few market sources and a wide range of high and low prices. From the current market transactions, Hong Kong and Maanshan Iron and Steel have relatively sufficient supply, but the transactions have been slightly hindered. On the one hand, they are full of inventory and logistics is difficult to unload; on the other hand, terminal purchases are mainly for bulk orders, and inventory clearance is slow.

Judging from the price comparison chart of hot and cold rolled sheet, although the prices have fallen sharply after the Spring Festival, the decline of hot rolling is basically twice that of cold rolling. However, since the end of February, there has been a slow stop-fall and recovery of hot-rolling, which is mainly caused by the sharp rise in the price of raw iron ore and the rise in the price of hot-rolled futures. However, it is still subject to the slow recovery of demand and the price rise is small. The price of cold rolling has also risen under the influence of hot rolling, but because of its higher dependence on the downstream, the rise is “a flash in the pan”.

Supply: As of February 28, there were 29 47 cold-rolled production lines across the country. The number of production shutdowns was reduced to 8 compared with the previous one. The overall operating rate was 82.98%. It has been steadily rising for 3 consecutive weeks, and the rate of resumption of business has accelerated. The utilization rate was 75.01%, but it showed a downward trend, indicating that manufacturers were still limited in production and prices despite the falling prices. In addition, the weekly output of steel mills was 759,300 tons, a slight decline, and the overall stability. On the whole, at the current time point, the cold rolling market supply is still under increasing pressure, and most steel mills are not willing to reduce production, which continues to weigh on prices.

Inventory: As of February 28, the inventory of 29 cold-rolled steel mills nationwide was 572,800 tons, although the week-on-month decrease was 21,700 tons, but it had nearly doubled year-on-year, and reached a record high. In addition, the inventory of 26 major cities was 14.958 million tons, which rose for 7 consecutive weeks, setting a record high. Therefore, from the current point of view, steel mills are still shipping one after another, but the social inventory warehouse is full and it is difficult to unload. As a result, conflicts between resources in transit and inventory resources, pressure on traders' funds and clearance, had to start to cut prices and ship, and then continued to bear prices.

Demand: According to surveys conducted by business associations, manufacturing companies across the country are gradually returning to work, and the infrastructure industry that is the first to resume production is the main downstream of the cold rolling market. Most of the manufacturing and processing industries are still resumed in early March. Production-oriented, the current overall recovery rate is around 25% (especially cold-rolled downstream processing plants), it is clear that in the middle and early March of the company's recovery rate is 65%, there are still unclear 10%. Therefore, as a whole, the purchase demand for cold rolling in mid-March may quickly improve.

However, some end-user companies said that although the company is already operating normally, due to the strict prevention and control measures and the influence of the company's working capital, the procurement cost has dropped, and the management cost has greatly increased. As a result, after the resumption of work, the procurement of the raw material market will be relatively conservative However, the trader said that the current interest rate of pallet funds has risen, but the new supply of steel mills is on the way, and the pressure of liquidity is greater than that of the downstream. Price reduction sales and increased willingness to sell goods and clear warehouses.

To sum up, SunSirs analysts believe that the current fundamentals of the cold rolling market are mainly "supply oversupply". Although the market generally believes that "demand is not disappearing, but is delayed", but the current company's " Capital difficulties, inventory difficulties, and cost difficulties "may cause them to go through a" hardest period ". If they survive, they will succeed, and if they fail, they will be" bankruptcy plus liquidation and eliminated by the market. " Therefore, from the current market conditions and national policies, during this difficult period or during the first half of March, the overall market is expected to show "supply recovery and pressure storage, sufficient resources are difficult to unload; demand is gradually unsatisfactory, and funds are strained and consumed quickly. "Situation. Therefore, it is expected that the price of cold rolling in March may decrease first and then increase. The upward trend may be in the middle and late March, and the average price is expected to be 4200-4300 yuan / ton.

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