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SunSirs: Cold-rolled sheet may stop falling in April, but the market is still weak

April 09 2020 14:56:44     SunSirs (Molly)

After a month of accelerating the resumption of production and production, the country's cold rolling market has not yet ushered in the spring of the industry. Prices continue to decline. The main reason for the decline is that the destocking rate is very slow. The operating rate of steel mills is high, and the downstream terminal is buying and not buying, and the price is down to purchase. Under such double pressures of supply and demand, merchants can only ship at low prices in order to return funds.

According to SunSirs price data monitoring, as of April 3, the average price of Shanghai ’s 1.0 * 1250 CRC market was 3,682.50 yuan / ton, a significant decrease of 3.6% from the beginning of the month, a year-on-year decrease of 15.64%, and a decline of 18.44% , And fell more than a month in April, the price fell nearly 850 yuan / ton. Among them, Benxi Iron and Steel 3670-3710 yuan / ton, Anshan Iron and Steel 3660-3700 yuan / ton, Magang 3680-3730 yuan / ton, Wuhan Iron and Steel 3700-4000 yuan / ton. The price gap between WISCO's sources of supply has widened, while the prices of other steel mills are similar. On the one hand, WISCO has more sources of inventory, on the other hand, there is less market movement, and the overall price difference is not large. It is worth noting that at present, there are still many sources of goods on the way, and the pressure of unloading at the port is still relatively large, so it is difficult for the short-term cold-rolled prices to stop falling and rebound.

Judging from the price comparison chart of cold rolled plate and hot rolled plate, the downward trend of the two has been consistent in the past 3 months, but compared with the continuous downturn in cold rolled, the hot rolled price has improved due to the futures market. The price of raw iron ore rose strongly, and a short-term rebound rally began in early April. However, as far as the fundamental market is concerned, the market demand for sheet metal is generally sluggish, and hot-rolling gains may not be sustainable, so it is difficult for cold-rolling to "turn over" in the short term.

Supply: As of April 3, there were 29 47 cold-rolled production lines nationwide, and the number of production stops was increased to 6 from before. The overall operating rate was 87.23%. The rate also fell slightly to 77.93%, which has been falling for 2 consecutive weeks. As a result, the weekly output of the steel mill was slightly reduced to 788,800 tons, and it has also dropped for two consecutive weeks. Overall, subject to the continued decline in cold-rolling prices, steel mills are willing to reduce production, but the supply level is still high, and there may still be room to stop production in the future.

Inventory: As of April 3, the inventory of 29 cold-rolled steel mills nationwide was 597,700 tons, a decrease of 13,600 tons from the previous week, and a continuous decrease of 2 weeks, but it still more than doubled year-on-year. However, the inventory of 26 major cities in the market was 14.561 million tons, ending the four consecutive declines, and the inventory rebounded slightly by 10,600 tons, and it was still at a high level. Therefore, from the current point of view, although the steel mills have the willingness to reduce production, the market consumption is still relatively small, which has caused the double pressure of the stock and funds of the major agreement households and the large households, which has also led to a reduction in the orders of the steel mills in May. . Therefore, it is expected that with the strengthening of the willingness of the steel mills to stop production in the later period, the clearance rate will be accelerated.

Demand: As the epidemic continues to escalate in various countries around the world, the cold winter of the automotive industry has finally spread to the whole world, and cold rolling, as one of the main raw materials of the automotive steel industry, has also been dragged down by this. Previously, due to the double impact of the epidemic situation and the February sales off-season, the Chinese auto industry was hit hard. In February, car sales fell 79.1% from the same period last year, and market sales fell back to 2005 levels. Similarly, car sales in Europe and the United States also experienced a steep decline in March. According to the data provided by the National Association of Automobile Manufacturers, Germany's 38% sales decline rate in March was the best in the main European and American markets, followed by the UK's 44%, and other countries are around 70%. Among them, Spain accounted for 69% and France 72%; while Italy, the country with the most severe epidemic, saw its car sales plunge 85% in March compared to the same period last year. The tremendous financial pressure brought about by the factory's suspension of production and the plunge in sales volume has made more and more car companies have to struggle through layoffs or salary cuts. It can be said that the global auto industry is forced to press the "pause button". According to the latest forecast of "Japan Economic News", global auto production in 2020 may decline by nearly 40% year-on-year. Global management consulting company McKinsey also said that the epidemic will seriously affect the performance of the automotive industry in 2020. It is expected that world car sales in 2020 may decline by 29%, of which China's car market sales fell by 15%, and sales in the US and European markets decreased by 18% -36 %, Production decreased by nearly 5 million vehicles. Therefore, from the current downstream point of view, although domestic demand has improved, the sluggish export market and global industrial output reductions are expected to hardly change in the short term.

In summary, SunSirs cold-rolled analysts believe that the fundamentals of "supply oversupply" in the cold-rolled market continue to operate, and it is difficult for short-term prices to show signs of rebounding. In addition, according to the sales agency, the current transaction is slightly better than that in March, but it is still worse. Most buyers have severely suppressed prices, and traders are relatively entangled in whether they ship or not. However, from a mentality point of view, after the downturn in the first quarter, most businesses have a certain resistance to the current decline, and there is no large-scale dumping of goods. This has also alleviated the price decline to a certain extent. In addition, the steel mill subsidy market and the preferential ordering policy in May were introduced. Some large households and agreement households have ordered new products, but most traders still have sales pressure. On the other hand, it is understood from the steel mills that although the ex-factory price fell mainly in April, the decline began to slow down. In addition, the continuous introduction of national policies to assist small and medium-sized enterprises has also eased market pressure, and with the basic control of the domestic epidemic, the national economy has gradually recovered. Therefore, it is expected to stop falling in April, but the overall market is still weak. The price level ranges from 3600-3800 yuan / ton.

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