Price trend

Last week, hot rolled coil futures traded within a narrow range, and spot prices for galvanized steel sheets and coils remained stable with slight fluctuations. Some traders offered small discounts to boost sales. According to SunSirs' commodity market analysis system, as of December 26th, the average price of galvanized steel sheets and coils in the domestic market was 4,090.00 RMB/ton, a slight decrease of 0.30% compared to the beginning of the week.

Market Analysis

Fundamentals: Last week, the capacity utilization rate of galvanized steel coils remained at a high level, leading to significant supply pressure on the market. Market demand, however, was weak. Although social inventories decreased, this is expected to be a short-term situation. It is anticipated that the market will continue to be in a state of oversupply in January.

According to the latest data obtained by SunSirs, the overall operating rate of galvanized steel sheets last week was 79.93%; the capacity utilization rate was 66.84%, an increase of 0.07% compared to the previous week; the weekly output was 953,300 tons, an increase of 1,000 tons compared to the previous week; steel mill inventory was 496,200 tons, a decrease of 400 tons compared to the previous week; social inventory was 1,243,200 tons, a decrease of 14,600 tons compared to the previous week; and total inventory was 1,739,400 tons, a decrease of 15,000 tons compared to the previous week.

In terms of market sentiment, the trading atmosphere was subdued due to weakening seasonal demand, with end-users making purchases on an as-needed basis and actual transactions remaining limited. As of December 26, supply-side pressure remained high, steel mills were maintaining normal production levels, and the rate of inventory reduction was slow. With tighter liquidity at the end of the year, traders generally had low willingness to place orders and were primarily focused on actively selling off inventory to recover funds.

In terms of costs, major steel mills in the Shanghai region released their settlement policies last week, with the settlement price for galvanized steel sheets and coils at 4,085 RMB/ton, which was lower than the spot market price.

Industry News: On December 26th, the first coil of steel was successfully produced on the 1780 rolling mill at Panhua Group - Anhui Panhua New Materials Co., Ltd.

From December 1st to 21st, national retail sales of new energy passenger vehicles reached 788,000 units, a 1% increase compared to the same period in December last year and a 3% increase compared to the same period last month. The penetration rate of new energy vehicles in the national passenger car market was 60.6%. Cumulative retail sales this year reached 12.26 million units, a 18% year-on-year increase. From December 1st to 21st, national wholesale sales of new energy passenger vehicles by manufacturers reached 782,000 units, a 10% decrease compared to the same period in December last year and a 12% decrease compared to the same period last month. The penetration rate of new energy vehicles in national passenger car wholesale sales by manufacturers was 60.1%. Cumulative wholesale sales this year reached 14.538 million units, a 25% year-on-year increase.

Market Outlook:

Overall, as the year-end approached, demand was gradually weakening due to seasonal factors, and the release of actual demand from downstream end-users lacked sustainability, resulting in overall performance falling below expectations. With high overall capacity utilization and a clear situation of oversupply, market transactions were mainly driven by essential demand. Sunsirs expects that galvanized steel sheet and coil prices will remain under pressure in the short term.

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