SunSirs: The Markets of Hot Rolled Coil and Cold Rolled Sheet Were Facing Weak Supply and Strong Demand, with Some Inventory Reduction (July 21-25)

Price trend

Hot rolled coil prices saw a slight increase this week. According to the SunSirs commodity market analysis system, as of July 25, the average domestic Hot rolled coil market price was 3,450 RMB/ton, a 1.6% week-on-week increase; the average domestic cold rolled coil market price was 3,800 RMB/ton, a 2.5% week-on-week increase.

Factors influencing price fluctuations:

Fundamentals

According to the latest data obtained by SunSirs, last week's Hot rolled steel inventory was 265.6 tons, a weekly decrease of 21,500 tons, and weekly production was 3.2114 million tons, a weekly decrease of 20,000 tons. This week's cold rolled steel inventory was 1.307 million tons, a weekly decrease of 3,400 tons, and weekly production was 867,700 tons, a weekly decrease of 14,300 tons.

Last week, the inventory of the same-caliber steel billet at major warehouses and ports in Tangshan was 1.1678 million tons, a weekly increase of 51,600 tons.

Cost side

Last week's supply of the five major steel products totaled 8.6697 million tons, a week-on-week decrease of 12,200 tons, or 0.1%. Steel production declined this period, with Hot rolled coil and wire rod production seeing more significant declines. Total inventory of the five major steel products reached 13.365 million tons, down 11,600 tons, or 0.1%, week-on-week. However, inventory trends for building materials and plate products diverged, with building materials continuing to decline while plate inventories continued to accumulate. Consumption of the five major steel products reached 8.6813 million tons, with building materials consumption increasing by 2.7% month-on-month and plate consumption decreasing by 1.7%. Consumption of building materials and plate products diverged between the five major steel products last week.

Future outlook:

On the supply side, steel demand remains resilient during the current off-season, but steel mill profits remain at their current high levels, with limited room for overall production decline. Regarding rebar, steel mill profits are currently at a relatively high level over the past two years, leading to high production enthusiasm and potential for short-term output growth.

On the inventory side, following the price rebound, there is some willingness among midstream and downstream players to replenish inventory, and the overall accumulation of inventory during the extended off-season is lower than expected.

On the demand side, steel demand remains resilient. With the recent macroeconomic downturn and news of coking coal production suspensions, steel prices have continued to rise, further stimulating speculative demand.

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