Market outlook: cold and hot rolled coil prices expected to stabilize and rise
Haihao Group closely monitors the fluctuations in the raw materials market and provides timely analysis to customers. Looking ahead, scholars predict that the cold and hot rolled coil market is likely to stabilize and show an upward trend.
In August, the domestic market for cold and hot rolled coils showed minimal improvement, with trading activities generally sluggish and steel prices fluctuating. Many steel traders maintained a cautious attitude towards the market outlook. However, after a period of significant decline, there is a strong possibility that cold and hot rolled coil prices will stabilize and begin to rise.
August Market Overview
In August, the prices of cold and hot rolled coils in China experienced significant volatility, characterized by steep declines in both speed and magnitude. For example, in the Shanghai market, the price of 1.0mm cold-rolled steel ST12 from Ansteel fell from 3,890 RMB/ton at the beginning of August to 3,780 RMB/ton by the end of the month, a decrease of 110 RMB/ton. Similarly, the price of 5.5mm to 11.75mm × 1500mm × C hot-rolled coils Q235B from Shougang and Ansteel dropped from 3,450 RMB/ton to 3,200 RMB/ton, a decline of 250 RMB/ton.
However, entering the latter part of August, prices started to recover. By the end of the month, hot-rolled coil prices in Shanghai rose by 50 RMB/ton, while cold-rolled coil prices increased by 40 RMB/ton.
Trading Activity and Challenges
Despite the modest rebound in prices, steel traders observed that overall trading activity remained lackluster, with end-users adopting a cautious approach and primarily purchasing based on immediate needs. In some cases, traders offered discounts to secure sales, resulting in a phenomenon where both official price cuts and hidden discounts were prevalent in the market.
Key Factors Supporting Price Stabilization
Looking ahead, several factors suggest that cold and hot rolled coil prices are likely to stabilize, with limited chances of further significant declines:
1.Increased Willingness to Stabilize Prices After consecutive months of steep price drops, manufacturers and traders are under significant financial pressure, leading to a stronger desire to stabilize prices. In July and August, cold and hot rolled coil prices in Shanghai fell by 310 RMB/ton and 300 RMB/ton, respectively, in July, followed by a further 110 RMB/ton and 250 RMB/ton drop in August. Over these two months, the cumulative price decline was 420 RMB/ton for cold rolled coils and 550 RMB/ton for hot rolled coils. This sharp decline has driven both steel manufacturers and traders into loss-making territory. According to the China Iron and Steel Association, profits for key steel companies in July fell by 88% year-on-year and 90% month-on-month. With increased pressure on cash flow, the desire to stabilize prices has intensified, which is expected to curb further price drops.
2.Seasonal Demand Improvement Entering the “Golden September and Silver October” period, demand for cold and hot rolled coils is expected to improve, especially in key industries such as automotive and home appliances. According to data from the China Passenger Car Association (CPCA), retail sales in the passenger car market reached 1.305 million units from August 1 to August 25, a year-on-year increase of 5% and a month-on-month rise of 9%. Cumulatively, passenger car retail sales in China for the year reached 12.872 million units, a year-on-year growth of 3%.
Similarly, the home appliance manufacturing sector has shown signs of growth. According to the latest report from industry institutions, the combined production of air conditioners, refrigerators, and washing machines in China is expected to reach 26.62 million units in September, a 4.5% increase compared to the same period last year. The production of air conditioners alone is forecasted to rise by 8.8%, while refrigerator and washing machine production is expected to grow by 2.2% and 1.5%, respectively. The increased production and sales in these industries will drive demand for cold and hot rolled coils, supporting price increases.
3.Reduced Steel Production Recently, there has been a notable increase in steel production cuts, which will help alleviate the imbalance between supply and demand in the market. In July, China’s crude steel production reached 82.94 million tons, down 9% year-on-year, while apparent consumption of crude steel was 75.23 million tons, a 10.6% year-on-year decline. The oversupply situation led to a 10.8% increase in steel inventories by the end of July, and the China Steel Price Index (CSPI) hit an eight-year low in mid-August. In response, many steel companies have voluntarily reduced or limited production. In early and mid-August, the daily average crude steel output of key steel enterprises was 1.998 million tons, a 7.1% decrease from the previous period and an 8.5% year-on-year decline.
As steel production declines, the reduction in supply will help ease the supply-demand imbalance and support the stabilization of cold and hot rolled coil prices in the coming months.
While the cold and hot rolled coil market experienced significant price declines over the past few months, the outlook is improving. With manufacturers keen on stabilizing prices, a recovery in demand from key industries, and a reduction in steel production, cold and hot rolled coil prices are expected to stabilize and gradually rise in the near future. Haihao Group will continue to monitor market trends closely and provide timely updates to our customers.