Price trend

Last week, hot rolled sheet and coil prices initially fell before recovering. According to the SunSirs commodity market analysis system, as of November 7, the average price of domestic hot rolled sheet and coil was 3,320 RMB/ton, a week-on-week decrease of 1.07%; the average price of domestic cold rolled sheet was 4,000 RMB/ton, a week-on-week decrease of 0.744%.

Factors influencing price changes:

Fundamentals

According to the latest data obtained by SunSirs, last week's social inventory of hot rolled steel was 333.02 tons, up 40,900 tons week-on-week, and the weekly output was 3,181,600 tons, down 54,000 tons week-on-week. Last week's social inventory of cold rolled steel was 1,371,900 tons, down 18,100 tons week-on-week, and the weekly output was 859,700 tons, down 1,000 tons week-on-week.

Last week, the inventory of steel billets in Tangshan's main warehouses and ports was 1.2607 million tons, an increase of 1,500 tons compared to the previous week.

Last week, the supply of the five major steel products was 8.5674 million tons, a decrease of 185,500 tons, or 2.1%, week-on-week; total inventory was 15.0357 million tons, a decrease of 101,900 tons, or 0.67%, week-on-week; weekly consumption was 8.6693 million tons, a decrease of 5.4%, of which construction material consumption decreased by 7.2% week-on-week and plate consumption decreased by 0.2% week-on-week.

Cost side

On the supply side, the supply of the five major steel products last week was 856.74 million tons, a decrease of 185,500 tons week-on-week, a drop of 2.1%. The output of all five major steel products decreased week-on-week last week, primarily driven by shrinking steel mill profits and maintenance shutdowns at some mills. Regarding inventory, the total inventory of the five major steel products last week was 15.0357 million tons, a decrease of 101,900 tons week-on-week, a drop of 0.67%. The total inventory of the five major products decreased week-on-week: mill inventory decreased week-on-week, mainly due to rebar. Social inventory also decreased week-on-week, also mainly due to rebar. On the consumption side, the weekly consumption of the five major steel products last week was 8.6693 million tons, a decrease of 5.4%; among which, construction material consumption decreased by 7.2% week-on-week, and plate consumption decreased by 0.2% week-on-week. The apparent consumption of the five major products last week showed a double decline in both construction and plate products, reflecting some pressure on market demand.

According to Mysteel statistics, in the construction materials sector, taking rebar as an example, across the three major regions, East China saw an accumulation of 42,100 tons of inventory, while the South and North saw week-on-week decreases of 63,600 tons and 29,600 tons respectively. Across the seven major regions, except for East China and Northwest China, all other regions experienced inventory reductions. Regarding hot rolled coil, across the three major regions, East China and South China saw week-on-week accumulations of 42,000 tons and 7,300 tons respectively, while the North saw a week-on-week decrease of 8,400 tons. Across the seven major regions, except for East China and Southwest China, all other regions experienced inventory reductions.

Market Forecast:

On the supply side, due to a decline in steel mill profits and some steel mills undergoing maintenance, the output of the five major steel products decreased slightly last week. In addition, some steel mills in Shanxi also proposed maintenance plans, increasing expectations of further supply contraction.

On the demand side, according to a survey by 100-year construction company, as of November 4, the funding availability rate of sample construction sites was 59.82%, up 0.12 percentage points week-on-week. Among them, the funding availability rate for non-building construction projects was 61.22%, up 0.07 percentage points week-on-week, and the funding availability rate for building construction projects was 53.19%, up 0.37 percentage points week-on-week. The demand for the five major building materials is at a low level this year, and the demand situation is under pressure.

Inventory performance was somewhat divergent, showing a trend of decreasing total rebar inventory while increasing total hot rolled coil inventory, reflecting increased supply and demand pressure for hot rolled coil. Meanwhile, inventories of the five major steel products were at high levels in recent years, indicating continued inventory pressure.

Overall, demand for finished steel products has entered the off-season, and the pressure for a subsequent recovery has increased. The overall performance shows weak supply and demand, while macro sentiment has temporarily declined. It is expected that the price of ferrous metals will fluctuate in the short term.

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