Price Trend

According to the SunSirs Commodity Market Analysis System, as of April 30, the average price in the domestic hot rolled sheet and coil market stood at 3,446 RMB/ton, representing a week-on-week increase of 0.291%; meanwhile, the average price in the domestic cold rolled sheet market was 3,837 RMB/ton, an increase of 0.182% compared to the price two weeks prior. As of April 30, the price spread between cold rolled and hot rolled products was approximately 391 RMB/ton.

Cost Side: Raw materials had strengthened across the board, providing solid cost support.

Last week, upstream raw material prices rose across the board, serving as the primary driving force behind the upward trend in hot rolled coil prices, while cost pressures on steel mills continued to intensify.

1. Iron Ore: Port inventories continued to deplete, while steel mills engaged in concentrated restocking ahead of the May Day holiday; coupled with a bullish trend in futures markets, the mainstream price for 60.8% PB fines at Shandong ports stood at 770–775 RMB/ton—marking a slight weekly increase of 2–5 RMB/ton—indicating strengthened support from the raw materials sector.

2. Coke: The second round of price hikes has been fully implemented, with some coke producers initiating a third round of increases; as coking coal prices remain at elevated levels, overall steelmaking costs have risen, leading steel mills to demonstrate a strong resolve to maintain current price levels.

3. Steel Billets: The ex-factory price for standard square billets in Tangshan rose by 10 RMB/ton over the week; with a tax-inclusive cost of 3,020 RMB/ton, this directly drove up processing costs for hot rolled coils.

4. Steel Mill Profitability: As of April 30, the profitability rate for steel mills stood at approximately 49.78%. Profit margins remained satisfactory, production enthusiasm remained high, and cost-side factors were limiting the downside potential for prices.

Supply Side: Output remained stable with a slight upward trend, while capacity utilization operated at high levels

Last week, the overall supply of hot rolled coils remained at a high level; steel mills maintained stable production enthusiasm, with no significant actions taken to reduce output.

1. Production Data: As of April 24, the national weekly output of hot rolled coils stood at 3.0571 million tons, representing a week-on-week increase of 31,000 tons. Steel mills' capacity utilization rate reached 78.1%, up 0.79 percentage points from the previous week, while the average daily output of molten iron remained at a high level of 2.3932 million tons.

2. Production Strategies: Steel mills are prioritizing the scheduling of hot rolled coil production—primarily because profitability for flat products currently surpasses that of long products—bolstered by steady demand from downstream manufacturing sectors. Consequently, most mills are operating at full capacity to meet demand, with no plans for concentrated maintenance or production cuts in the short term.

3. Export Update: Export quotes for hot rolled coils rose by $10/ton FOB week-on-week. The widening price spread between domestic and international markets has driven a recovery in export margins, thereby alleviating domestic supply pressure to some extent; however, overseas buyers remain cautious in placing orders, limiting the potential for significant growth in export volumes.

Demand Side: Domestic demand saw a weak recovery, with pre-holiday inventory restocking driving transaction volume

Last week, demand for hot rolled coil was characterized by a seasonal recovery, support from pre-holiday inventory restocking, and overall weakness; notably, the pace of demand recovery lagged behind the pace of price appreciation.

1. Domestic Demand: Operating rates in downstream sectors—such as manufacturing, steel structures, and mechanical processing—have seen a seasonal rebound. Demand within the automotive and machinery industries remains robust, driven by policies promoting equipment renewal; however, exports of home appliances and shipping containers remain subdued due to the impact of trade frictions. Steel demand from the real estate and infrastructure sectors remains sluggish; overall market activity is characterized primarily by purchases to meet immediate, essential needs and concentrated inventory restocking ahead of the holiday, with insufficient follow-through on high-priced orders.

2. Apparent Consumption: As of April 24, the weekly apparent demand for hot rolled coils stood at 3.1012 million tons—a marginal week-on-week decline of 6,200 tons and a year-on-year decrease of 142,400 tons. The momentum of demand recovery remains limited, lagging behind the growth observed on the supply side.

3. Export Demand: Impacted by geopolitical conflicts and a slowdown in overseas economic recovery, overall export activity remains under pressure. In January and February, the export volume of hot rolled coils plummeted by 57.28% year-on-year. Although export quotations have risen, overseas buyers remain cautious regarding new orders; consequently, the role of exports in absorbing domestic supply has diminished.

Inventory Status: Total inventory continued to be drawn down, while factory and social inventories showed divergent trend

Last week, hot rolled coil inventories generally exhibited a destocking trend; while total inventory declined—driven by a slight accumulation in mill stocks and an accelerated drawdown in social stocks—the inventory structure continued to optimize.

1. Total Inventory: As of April 24, the total inventory of hot rolled coils stood at 4.1557 million tons—a week-on-week decrease of 44,100 tons (1.05%)—thereby continuing the trend of inventory reduction.

2. Mill Inventory: Steel mills scheduled production based on demand; however, pre-holiday restocking activities led to a slight accumulation of inventory within the mills, resulting in a week-on-week increase of 22,900 tons, bringing the total to 824,100 tons.

3. Social Inventory: Traders actively engaged in destocking prior to the holiday; coupled with demand-driven purchasing from end-users, social inventory declined significantly. On a week-over-week basis, stocks fell by 67,000 tons to 3.3316 million tons, indicating an accelerated pace of destocking and a consequent alleviation of inventory pressure.

Market Outlook: Post-Holiday Trading Expected to Be Volatile; Focus Shifts to the Sustainability of Demand

The price of hot rolled sheets and coils sits at the median level for the year; while there is still room for appreciation, that upside potential is limited.

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