SunSirs: In Mid-April, Cold Rolled prices may stop falling and stabilize

Although all regions are pushing ahead with resumption of work and production, prices in the cold rolling market continue to fall. On the one hand, due to the pick-up of steel mills, the production rate is faster than the consumption of market inventory; on the other hand, due to the surge in supply in transit, the social warehousing, and the pressure on merchant funds, there has been a continuous sell-off; finally, the recovery in terminal demand has been relatively partial Slow, the transaction was slightly sluggish, dragging down prices.

According to the monitoring of SunSirs price data, as of March 23, the average price of Shanghai's 1.0 * 1250 CRC market was 4,050 yuan / ton, a 4.20% drop from the beginning of the month, and a 6.30% drop from the same period last year. Prices fell by nearly 500 yuan / ton. Among them, Benxi Iron and Steel is 4020-4060 yuan / ton, Ansteel is 4080-4120 yuan / ton, Maanshan Iron and Steel Group is 4050-4150 yuan / ton and Wuhan Iron and Steel Group is 4100-4200 yuan / ton. WISCO's supply gap has narrowed, and the market has gradually arrived. In addition, the transaction of Benxi Iron and Steel's low-priced resources has slowed down compared with the previous period, and the prices of other steel mills have been dragged down, resulting in a decline in the overall market transaction price. Trading of loose orders by traders is still the main form at present.

From the comparison chart of the prices of hot and cold rolled sheets, the decline trend of the two is basically the same in the past three months, except that the drop in hot rolling is larger than that in cold rolling, but the price difference in March is gradually compared to mid-February. The contraction was mainly due to the accelerated decline in cold rolling. The reason is mainly due to the increase in new arrivals of steel mills, increasing market inventory pressure, and falling prices. However, from the perspective of the futures market, hot rolling experienced four consecutive declines in late March, all of which were the Da Yin line, and the price basically returned to the level of early February, which caused the market to expect a more positive bearish attitude, which in turn drove the overall sheet market price to fall sharply.

Supply: As of March 20, there were 29 47 cold-rolled production lines across the country. The number of production cuts was reduced to 5 compared with the previous one. The overall operating rate was 89.36%, a new high since 2019, and the rate of resumption of enterprises has accelerated; and overall capacity The utilization rate also rebounded to 78.68%, setting a new high level after the Spring Festival in 2020. This also caused the weekly output of steel mills to reach 796,400 tons, which also hit a new high level after the Spring Festival in 2020. On the whole, the supply of the cold-rolled market has reached a peak level at the current time point. However, the year-on-year data shows that it has basically declined slightly, so it is expected that it will be difficult to increase the start of construction in the future.

Inventory: As of March 20, the inventory of 29 cold-rolled steel mills across the country was 640,000 tons, an increase of 152,000 tons weekly, and continued to more than double from the same period last year, setting a record high. However, the inventory of 26 major cities was 1,478,800 tons, which had been declining for two consecutive weeks. There was an inflection point in social inventory data. Therefore, from the current point of view, although the steel mills continue to produce and ship, but the logistics are limited for a short period of time, and the warehouses are unloadable, it is difficult to unload the cargo. As a result, the entire inventory has moved to the steel mills. It is expected that after the market is consumed in the later period, the supply here will continue to be reduced to traders, and prices may continue to be under pressure.

Demand: It is understood that the terminal manufacturing data in February was generally sluggish, but in March, driven by the state's basic resumption and production restart policy, market demand for the entire industry has begun to recover. However, it is understood from traders that although most of the end markets have begun production normally, their demand has not increased significantly. On the one hand, the global economic situation has declined in an all-round way under the influence of global public health events, and it has also spread to China to a large extent, and export demand has been severely restricted. Most of the higher value-added processing materials market began to shrink, further reducing the demand for cold-rolled markets. Therefore, the demand for inventory consumption is expected to continue in the short term, but the long-term downturn cannot be ignored.

To sum up, SunSirs cold-rolled analysts believe that the current fundamentals of the cold-rolled market are still in the "supply oversupply" market and it is difficult to see price increases in the short term. In addition, although the delayed demand has begun to increase and show the market (declining inventory inflection point), the overall company's funding situation is tight or difficult to resolve in the short term, so the "price reduction purchase, one single negotiation" market still exists. And most of the traders are still not optimistic about the market outlook, or continue to slump in April, mainly in May or June, there is a new price increase, so most of them began to cut prices to clear stocks and return funds. Therefore, it is expected that the cold rolled prices will continue to decline weakly in late March, and may have stopped falling in mid-April, but remain weak. The price level range is 3950-4100 yuan / ton.

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