SunSirs: Inventory Pressure Constrains Galvanized Sheet and Coil Prices to Run Weak

Driven by favorable macroeconomic policies, hot-rolled coil futures were strong last week, market sentiment improved, downstream end-users' purchasing enthusiasm increased, stocking demand was gradually released, and the transaction atmosphere of galvanized coil market warmed up. In the short term, traders generally hold a bullish attitude, and the quotations are relatively strong, but the transaction of high-priced resources is still cautious.

According to the commodity market analysis system of SunSirs, the prices of galvanized coils rose and fell across the country last week. As of May 16, the average market price of galvanized coils in the domestic market was 4245.00 RMB/ton, down 0.29% from the beginning of the week.

Fundamentals: The futures market rose last week, and the shipment performance of merchants in the galvanized coil market was acceptable.

According to the latest data obtained by SunSirs, the overall operating rate of galvanized sheets last week was 81.63%; the capacity utilization rate was 64.18%, up 0.17% from the previous week; the output last week was 915,400 tons, an increase of 2,400 tons from the previous week.

The United States adjusted its tariffs on China, and short-term export orders may recover. Downstream terminals are more willing to accept orders and prepare stocks, and market pessimism has eased. As of May 9, the inventory of steel mills across the country was 477,700 tons, down 10,100 tons from last week; the social inventory was 1.1124 million tons, up 0.2% from the previous week; the total inventory was 1.5902 million tons, down 8,100 tons from the previous week.

Last week, Anshan Iron and Steel and Benxi Iron and Steel issued their June ordering policies, among which the ordering price of galvanized sheet and coils was reduced by 50 RMB/ton from the previous period. Most of the merchants in the market are cautious and wait-and-see about the future market.

Forecast for the future market: On the whole, affected by futures fluctuations and weak demand, coupled with inventory pressure constraints, the supply and demand relationship is still the dominant adjustment factor. SunSirs expects that the price of galvanized sheet and coils may continue to fluctuate in a narrow range in the short term.

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