Price trend

Hot rolled coil futures prices fluctuated downward last week, driven by subdued speculative demand and a cautious wait-and-see attitude among downstream customers. Procurement remained limited to rigid demand, resulting in a sluggish trading atmosphere and a weak overall decline in spot prices for galvanized sheet and coil. According to the SunSirs Commodity Market Analysis System, as of August 22, the average domestic price of galvanized sheet and coil was 4,285.00 RMB/ton, a slight decrease of 0.58% from the beginning of the week.

Analysis review

Fundamentals:

Galvanized sheet and coil capacity utilization declined slightly last week, but the reduction was relatively limited. Supply remained relatively high, and merchants primarily chose to ship to recover funds. According to the latest data obtained by SunSirs, the overall operating rate of galvanized sheet last week was 80.27%, and the capacity utilization rate was 64.24%, a decrease of 0.25% from the previous week. Weekly output was 916,200 tons, a decrease of 3,600 tons from the previous week.

In the downstream market, it's reported that due to the off-season, downstream customers were primarily purchasing on demand and were not actively stocking up. With the arrival of steel mill resources, social inventories showed signs of increasing, and merchants were primarily choosing to ship to recover funds. According to the latest data obtained by SunSirs, as of August 22nd, mill inventories of galvanized sheet and coil stood at 464,700 tons, an increase of 1,400 tons from the previous week; social inventory stood at 1,148,800 tons, an increase of 14,500 tons from the previous week; and total inventory stood at 1,613,500 tons, a 15,900-ton increase from the previous week.

In terms of cost, mainstream steel mills in Shanghai introduced settlement policies last week, among which the settlement price of galvanized sheet and coil arriving at the port was 4,240 RMB/ton.

Industry dynamics: 

Data from Aowei Cloud Network shows that the online retail sales of color TVs increased by 3.4% year-on-year in July; the online retail sales of refrigerators, freezers, washing machines, stand-alone clothes dryers and air conditioners decreased by 8.3%, increased by 14.5%, increased by 21.6%, increased by 4.6% and increased by 35.1% year-on-year respectively.

Market outlook

On the whole, as supply continued to remain at a high level, pressure on the consumer side is gradually emerging. In the absence of obvious positive factors in the short term, SunSirs predicts that the price of galvanized sheet and coil may continue to adjust weakly in the short term.

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