Market Analysis: cold and hot rolled coil market faces continued downtrend in August
As August begins, the domestic market for cold and hot rolled coils continues to show no signs of recovery. Market transactions remain sluggish, and prices are on a steady decline. The overall sentiment among steel traders is pessimistic, with most adopting a cautious outlook for the future. The market for cold and hot rolled coils is expected to maintain a weak and stable trend in the coming period.
In the last week of July, the price of 5.5mm Q235B hot-rolled coils in the Shanghai market dropped by 50 yuan/ton, while the price of 1.0mm cold-rolled sheets fell by 100 yuan/ton. Overall, July witnessed a rapid and significant decline in the prices of cold and hot rolled coils. Moving into August, this downward trend has persisted.
Cold rolled coil
The weak demand and high inventory levels have exacerbated the market’s struggles. Additionally, the transition between the old and new national standards for rebar has disrupted market sentiment, influencing the overall price trends of steel products. Scholars analyzing the market foresee that a significant rebound in the short term is unlikely, but the chances of a further sharp decline are also minimal. They recommend market participants closely monitor several key factors that could impact the market’s future trajectory:
1.Mixed Performance in Downstream Industries
The production and sales conditions in downstream industries vary significantly. In June and July, China’s automotive market remained sluggish, with a decline in car sales. According to the China Passenger Car Association, retail sales in the passenger car market reached 1.392 million units in July, down 3% year-on-year and 11% month-on-month. Wholesale volumes from passenger car manufacturers reached 1.357 million units, down 17% year-on-year and 28% month-on-month. The downturn in the automotive industry has led to a reduced demand for cold and hot rolled coils from car manufacturers.
On the other hand, the home appliance manufacturing sector shows a different trend. According to statistics, in August, the total planned production of air conditioners, refrigerators, and washing machines reached 26.72 million units, a 1.1% increase compared to the same period last year. Specifically, the production of air conditioners is expected to reach 11.989 million units, a 5.3% increase year-on-year; refrigerator production is forecasted at 7.5 million units, a 4.3% decrease; and washing machine production is expected to be 7.23 million units, a 0.5% increase. The demand for cold and hot rolled coils from the home appliance manufacturing sector is likely to increase in August.
Hot rolled coil
2.Increased Maintenance by Steel Enterprises May Ease Supply-Demand Imbalance
The ongoing market downturn and falling steel prices have led to shrinking profits and, in some cases, losses for steel enterprises. As a result, many steel companies have implemented production restrictions and reductions. As of the end of July, 38 steel enterprises across the country had initiated maintenance plans, according to incomplete statistics. Some companies began shutting down cold rolling mills for maintenance on August 1st, with the maintenance period lasting about 15 days, potentially affecting daily production by approximately 3,800 tons. Data from the China Iron and Steel Association indicates that in late July, major steel enterprises produced 21.71 million tons of crude steel, 19.68 million tons of pig iron, and 21.77 million tons of steel products. The average daily output of crude steel was 1.9735 million tons, down 8.14% from the previous period; pig iron averaged 1.7896 million tons daily, down 7.07%; and steel products averaged 1.9789 million tons daily, down 2.83%. The reduction in supply could help alleviate the supply-demand imbalance and contribute to stabilizing cold and hot rolled coil prices in the future.
3.Volatile Steel Raw Material Market
Recently, the markets for steel raw materials, including iron ore, scrap steel, and coke, have experienced volatility. At the beginning of August, prices for coking coal dropped by 50 to 100 yuan/ton, coke prices fell by 50 to 55 yuan/ton, and scrap steel prices decreased by 10 to 100 yuan/ton. The price of 61.5% PB fines at Qingdao Port in Shandong dropped by 10 yuan/ton. As the prices of steel raw materials decrease, the rigid cost support will weaken, which may negatively impact the market for cold and hot rolled coils in the future.
The cold and hot rolled coil market continues to face challenges, with weak demand and volatile raw material prices exerting downward pressure on prices. However, increased maintenance by steel enterprises and potential growth in demand from the home appliance sector may provide some relief. Market participants should closely monitor these factors as they navigate the uncertain market conditions ahead.As an expert in the field of piping systems, Haihao Group closely monitors changes in the raw material market and shares them with customers in a timely manner. If you want to know more information, please feel free to contact us.