Price trend

According to the SunSirs’ Commodity Market Analysis System, as of July 31, the average domestic hot rolled coil market price was 3,570 RMB/ton, an 11.21% month-on-month increase; the average domestic cold rolled sheet market price was 3,970 RMB/ton, a 7.95% month-on-month increase. The  price difference between hot and cold rolled products was around 400 RMB/ton.

Policy supported and domestic demand recovered

According to the latest statistics from the China Construction Machinery Industry Association on major excavator manufacturers, 18,804 excavators of all types were sold in May 2025, a year-on-year increase of 13.3%. Domestic sales of 8,136 units increased by 6.2% year-on-year, while exports increased by 19.3%. From January to June 2025, a total of 120,520 excavators were sold, a year-on-year increase of 16.8%. Domestic sales of 65,637 units increased by 22.9% year-on-year, while exports increased by 8.2% to 54,883 units. Accelerated infrastructure investment and incentives for equipment upgrades have led to a significant increase in domestic excavator sales.

According to the China Association of Automobile Manufacturers, the trade-in policy continued to be effective, domestic consumption was accelerating, and coupled with the intensive launch of new products by companies and active promotional activities at auto showed across the country, the passenger car market continued to perform well. According to authoritative data released by the China Passenger Car Association (CPCA), national passenger car retail sales reached 2.084 million units in June 2025, an increase of 18.1% year-on-year and 7.6% month-on-month. Cumulative retail sales for the first six months reached 10.901 million units, a year-on-year increase of 10.8%. Driven by favorable factors such as the expansion of the trade-in policy and the accelerated implementation of innovative achievements by companies, the passenger car market continued to perform well, with the terminal market rebounding after the holiday.

According to data from the National Bureau of Statistics, by May 2025, China produced 28.383 million household air conditioners, a year-on-year increase of 3.0%. Of this total, 13.66 million units were destined for domestic sales (a year-on-year increase of 29.3%), while 6.84 million units were destined for export (a year-on-year decrease of 18.3%). By June 2025, China produced 9.0474 million household refrigerators (and freezers and refrigerators), a year-on-year increase of 4.8%. From January to June 2025, China produced 50.6416 million household refrigerators, a cumulative increase of 0%. By June 2025, China produced 9.508 million washing machines, a year-on-year increase of 16.5%. From January to June, China produced 58.604 million units, a year-on-year increase of 10.3%. By June 2025, China produced 16.2516 million color televisions, a year-on-year decrease of 11.1%. From January to June 2025, China produced 91.8711 million color TVs, a year-on-year decrease of 5.5%.

Hot rolled sheet and strip companies' profits were not yet compressed. Without special factors, hot rolled coil supply is unlikely to decline in July and August

Judging from the production forecast for July and August, the planned maintenance volume of steel mills in August is basically the same as that in July. Except for some steel mills in Northeast China and some steel mills in Tangshan that may be affected by policies, steel mills in other regions have not reported too many maintenance plans. According to Mysteel's tracking, new production capacity will be put into production in some regions in August. Judging from this situation, there is relatively little room for production to decrease. After the increase in raw material prices, corporate profits have not decreased significantly. Steel mill profits remained at 150-200 RMB/ton, and orders on hand were generally at the level of 15-20 days. This may also make it difficult for steel mills to reduce production in the future. As the flow of goods is guaranteed, the space for accumulation in their factory warehouses is relatively limited. Looking at the major ferrous finished products, the profits of sheet and strip are almost the same as those of long products, but the sales of long products are difficult to expand significantly. This will also lead to the fact that the release of long product production itself will not be too large, and the room for production conversion is relatively small (after the domestic price increase, the reduction of long products to reduce billet exports will release some rebar production).

Demand situation of hot rolled sheets and strips in July and August

Demand surveys from July and August indicate that domestic manufacturing is restocking due to low inventories. However, order intake indicates no reversal of orders, particularly in backlogs, which show no clear upward trend. In the short term, this is merely a restocking exercise, and sentiment is cautious and wait-and-see. The reasons for the lack of significant improvement in domestic orders are: 1. Domestic manufacturing orders are generally average. After the price increase, the restocking phase has not seen significant growth in orders, and there is little appetite for increased purchases. 2. Christmas orders are slightly lower than in previous years, with shipbuilders reporting no shipping lines, reflecting the sluggish nature of actual consumption under the impact of tariffs. 3. Domestic fixed asset investment remains slow, particularly in project investment, which is also impacting equipment upgrades. 4. While domestic prices have rebounded, international prices have not followed suit, weakening China's export competitiveness. Therefore, this round of consumption is primarily driven by a recovery in sentiment and low inventories, primarily through restocking. The actual marginal variables have not changed significantly. Therefore, in this case, consumption resilience exists, and without major changes, the room for consumption to recover is relatively limited.

Market outlook

Judging from the situation in August, domestic consumption remains resilient, with the market primarily focused on restocking. Downstream consumption growth remains primarily driven by exports. This reflects the improvement in domestic demand, as external demand improves the domestic balance. However, from the perspective of surface demand, the price increase has partially suppressed external demand, while the strong domestic growth will lead to a sustained recovery in inventories. From a policy perspective, the situation differs from market expectations. Domestic demand, in particular, will experience a bottoming process, while external demand will depend more on whether overseas consumption can recover after the implementation of tariffs. Key points to watch for in the future include: 1. Whether steel mill profits can continue to recover in August, and whether exports will follow suit; 2. Whether overseas consumption can sustainably follow suit, particularly whether US consumer spending will decline in the future; and 3. While domestic surface demand is expected to decline, inventory accumulation is slow, which may boost market confidence. Therefore, currently, there are no significant contradictions in the ferrous metals market. Gross profit margins remain at 200 RMB/ton, regardless of price increases or decreases, indicating that the market is under little pressure. The increase in consumption in the first half of the year was mainly in exports (direct + indirect), so whether this part can be maintained in the future will determine the future direction.

Judging from the market conditions, ferrous metals remain strong, with coke prices having already begun their third round of price increases. Steel costs are strengthening, and with strong macroeconomic expectations and a positive market sentiment, prices are likely to remain relatively strong. However, the market is not without concerns. Market data suggests that prices have risen too high and too quickly, weakening the upward momentum of spot prices. Overall trading volume in the hot rolled coil market is gradually weakening, and overall demand remains to be determined. In the short term, with the upcoming meeting, market volatility is likely to gradually subside, with prices fluctuating at high levels. hot rolled coil and sheet prices are expected to be fluctuating and stronger nationwide next week.

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