SunSirs: The Market for Hot Rolled and Cold Rolled Steel Sheets and Coils Was Experiencing Increased Supply and Decreased Demand; and Outlook for Steel Prices in February (January 26-30)

Price trend

Last week, hot rolled sheet and coil prices experienced a slight decline. According to SunSirs’ commodity price analysis system, as of January 30th, the average price of hot rolled sheet and coil in the domestic market was 3,313 RMB/ton, a week-on-week decrease of 0.3%; the average price of cold rolled sheet in the domestic market was 3,807 RMB/ton, a week-on-week decrease of 0.781%.

Factors influencing price changes:

Fundamentals

According to the latest data obtained by SunSirs, last week's hot rolled steel social inventory was 2.7833 million tons, a week-on-week decrease of 28,100 tons, and the weekly production was 3.0921 million tons, a week-on-week increase of 38,000 tons; last week's cold rolled steel social inventory was 1.2115 million tons, a week-on-week decrease of 1,700 tons, and the weekly production was 884,300 tons, a week-on-week increase of 8,600 tons.

Last week, the inventory of steel billets at major warehouses and ports in Tangshan totaled 1.709 million tons, an increase of 38,200 tons compared to the previous week.

In terms of supply, the supply of the five major steel products last week was 8.2317 million tons, a week-on-week increase of 35,800 tons, or 0.4%; total inventory was 12.7851 million tons, a week-on-week increase of 214,300 tons, or 1.7%; and weekly apparent consumption was 8.0174 million tons, a decrease of 1.0% compared to the previous week.

Cost side

Hot rolled coils and steel plates: According to data from SteelHome last week, hot rolled coil production decreased by 29,500 tons to 3.0541 million tons, indicating a decline in supply. In terms of inventory, steel mill inventory increased by 15,300 tons, while social inventory decreased by 46,600 tons, resulting in a total inventory decrease of 45,500 tons. Apparent demand decreased by 42,000 tons. Last week, the weekly supply and demand strength index for hot rolled coils weakened compared to the previous week, indicating increased supply and demand pressure. Cold rolled coil production decreased by 2,400 tons, and mili steel plate production decreased by 73,200 tons. Total inventories increased by 2,100 tons and decreased by 4,600 tons respectively, while apparent demand decreased by 37,100 tons and 66,200 tons respectively.

Market outlook

From an industry perspective last week, hot rolled coil production decreased while rebar production increased significantly, and the rate of inventory reduction for hot rolled coil was better than that of rebar. In terms of supply and demand strength indicators, the supply and demand for hot-rolled coil continued to strengthen, while that of rebar weakened compared to the previous period. Therefore, it is expected that the price spread between hot rolled coil and rebar will continue to widen. Attention should be paid to the pace of steel mill restarts and the support that raw material restocking provides to ferrous metal prices.

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