SunSirs: Inventory Pressure Increased, and Galvanized Sheet and Coil Prices Fluctuated Within a Narrow Range

Price trend

Last week, hot rolled coil futures saw an overall upward trend followed by a decline. At the beginning of the week, driven by state-owned steel mills raising their September futures prices, market quotations generally followed suit. Later in the week, as raw material prices began to ease, the support for finished product costs weakened, leading to a slowdown in overall shipments. According to the SunSirs Commodity Market Analysis System, as of August 15, the average domestic galvanized sheet and coil market price was 4,317.50 RMB/ton, down 0.17% from the start of the week.

Analysis review

Fundamentals: Last week, galvanized sheet and coil capacity utilization saw a slight rebound. Rising galvanized sheet and coil prices, particularly at state-owned steel mills, heightened production enthusiasm. According to the latest data from SunSirs, the overall operating rate for galvanized sheet and coil was 80.27% last week, while capacity utilization was 64.49%, up 0.72% from the previous week. Weekly production was 919,800 tons, an increase of 10,200 tons from the previous week.

Driven by falling futures prices in the late of last week, spot prices for galvanized sheet and coil declined slightly, while social inventories continued to rise. This suggests that the recent price increases have not yet been effectively absorbed, with market turnover still the primary factor, leading to increasing inventory pressure in the future. According to the latest data obtained by SunSirs, as of August 15, mill inventories of galvanized sheet and coil stood at 463,300 tons, up 7,900 tons from the previous week; social inventories stood at 1,134,300 tons, up 41,100 tons from the previous week; and total inventories stood at 1,597,600 tons, up 49,000 tons from the previous week.

Regarding market sentiment, it's reported that state-owned steel mills are offering discounted orders in September, and some market participants had strong intention to maintain prices.

Industry News: On August 11th, Baosteel adjusted its September hot rolled and cold rolled prices, with the base price for thick plate and hot rolled products increasing by 200 RMB/ton; the base price for pickled and cold rolled products increased by 300 RMB/ton.

Data from the China Association of Automobile Manufacturers showed that in July, China's automobile production and sales reached 2.591 million and 2.593 million respectively, down 7.3% and 10.7% month-on-month, and up 13.3% and 14.7% year-on-year respectively.

Market outlook

This month, Baosteel's September futures order prices are still showing a sharp upward trend. The spot market lacks the momentum to follow the rise, and there are signs of increased inventories. SunSirs predicts that the short-term galvanized sheet and coil prices may continue to fluctuate in a narrow range.

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