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SunSirs: Demand for steel is improving, but short-term profile and hot coil prices for supply are under pressure.

April 23 2020 11:07:55     SunSirs (Molly)

On the 22nd, the overall price of the profile was weak and stable, and some merchants had alternative operations to reduce prices.

In terms of cost, the billet price of Tangshan billet is 3070 on the 22nd, which is 30% lower than yesterday. The current rolling mill's profit margin is squeezed due to the higher production cost, which makes the merchants have considerable prices, while the raw material prices are weak, and the merchants are expected to postpone the rise .

In terms of market, the rebar price of goods on the 22nd fluctuated upwards, and the market sentiment was temporarily stable. Since April, terminal demand has gradually recovered, and downstream purchases have also shown a release trend. With the speculation of Tangshan blast furnace production limit, the market mentality is cautiously optimistic. According to relevant data, on April 17, 2020, the Shanghai market profile warehouse conducted a survey of the same caliber, and the stock of channel steel was 7.53, which was a decrease of 0.27 inches from last week. There are 7.41 cases of H-beam stock, a decrease of 0.58 inches from last week. The reduction in steel inventory indicates that demand is gradually improving. But at the end of the month, in order to maintain their own capital flow, traders will prefer to cut prices in operation. However, the macroeconomic environment is declining, downstream companies are purchasing cautiously, watching the scale of operations, inquiring prices on the market, insufficient transaction orders, and overall market transaction conditions are poor.

However, it is understood that the steel production capacity has increased last week, and the supply side has picked up faster, which is not conducive to inventory destocking and steel prices are under pressure.

Taken together, analysts at SunSirs believe that cost support is weakening and downstream demand is getting better. However, the rapid recovery of steel supply, coupled with the poor macro environment, downstream purchases are more wait-and-see. It is expected that the prices of profiles and hot coils will tend to be weak and volatile in the short term.

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