Price trend

Hot rolled coil and sheet prices saw a slight increase this week. According to the SunSirs commodity market analysis system, as of July 25, the average domestic hot rolled coil and sheet market price was 3,450 RMB/ton, a 1.6% week-on-week increase; the average domestic cold rolled sheet and coil market price was 3,800 RMB/ton, a 2.5% week-on-week increase.

Factors influencing price fluctuations:

Fundamentals

According to the latest data obtained by SunSirs, the social inventory of Hot rolled coin and steel last week was 277.49 tons, up 118,900 tons from the previous week, and the weekly output was 3.1559 million tons, down 55,500 tons from the previous week; the social inventory of cold rolled steel and coin last week was 1.3205 million tons, up 13,500 tons from the previous week, and the weekly output was 860,500 tons, down 7,200 tons from the previous week.

Last week, the average cost of billet (including tax) at major sample steel mills in Tangshan was 2,905 RMB/ton, a weekly increase of 37 RMB/ton. Compared with the ex-factory price of ordinary square billet of 3,080 RMB/ton on August 13, the average profit at these mills was 175 RMB/ton.

Cost side

Last week, the capacity utilization rate of 314 independent coal washeries in the sample was 36.5%, a 0.29 percentage point increase from the previous month. Clean coal production was 264,000 tons per day, a 4,000-ton increase from the previous month. Clean coal inventories were 2.97 million tons, an 89,000-ton increase from the previous month. On the supply side, some steel mills experienced maintenance shutdowns and hot metal transfers, leading to divergence between product types. However, overall profits at steel mills remained healthy, and there was no significant decline in production intentions. While output of the five major steel products increased last week, it is expected that there will be little room for a significant decline in subsequent output. On the demand side, seasonal demand imbalances were gradually emerging, with apparent demand for the five major steel products continuing to decline, resulting in overall weak consumption. Furthermore, the price of building materials was declining, while that of flat steel was increasing. The price differential between coils and rebar had widened recently. Inventories of the five major steel products continued to rise last week, further highlighting fundamental pressures. On the cost side, the sixth round of price increases for coke took effect today. Major steel mills in Hebei Province, through bidding, increased prices for hydrated coke by 70 RMB/ton and for dry coke by 75 RMB/ton, since August 14th. Overall, cost support remained. Overall, contradictions in the fundamentals of steel continued to emerge, but there was still cost support. It is expected that steel prices will fluctuate in the short term.

Future outlook:

On the supply side, last week's supply of the five major steel varieties reached 871.63 tons, a week-on-week increase of 24,200 tons, or 0.3%. Week-on-week production of all five major steel varieties, except rebar, increased, driven by healthy overall steel mill profits. The main reason for the reduction in rebar production was maintenance shutdowns and hot metal transfers at some mills. Regarding inventory, total inventory of the five major steel varieties reached 14.1597 million tons, a week-on-week increase of 406,100 tons, or 2.95%. Total inventory of the five major varieties increased week-on-week: factory inventories increased, primarily due to wire rod. Public inventory increased, primarily due to rebar. Regarding consumption, weekly consumption of the five major varieties reached 8.3102 million tons, a 1.7% decrease. Building materials consumption decreased by 7.6% month-on-month, while plate consumption increased by 5.6%. Apparent consumption of the five major varieties last week showed a decrease in building materials and an increase in plate consumption, reflecting the seasonal effects of the off-season.

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