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Market outlook for cold and hot rolled coils

Market outlook for cold and hot rolled coils

As May draws to a close, the domestic market for cold and hot rolled coils continues to experience fluctuating transactions and prices. The market has seen a pattern of slight increases and decreases, creating a wave of cautious optimism among steel traders. Despite this, overall sales remain sluggish, and the outlook for the near future is one of cautious anticipation.

At Haihao Group, we closely monitor these market fluctuations to keep our customers informed and prepared.

Current Market Conditions

In mid-May, the Shanghai market saw a slight price correction after an initial rise in hot rolled coil prices, while cold rolled coil prices remained relatively stable. Downstream end-users are approaching procurement with caution, focusing on immediate needs rather than bulk purchases. Consequently, steel traders are experiencing stagnant sales volumes. In an effort to reduce inventory and maintain cash flow, some traders have resorted to price negotiations, leading to discreet price reductions across the market.

Short-Term Market Predictions

Looking ahead, it is anticipated that the market for cold and hot rolled coils will continue to experience minor fluctuations without significant upward momentum. Several factors contribute to this outlook:

Sustained Supply Pressure: The supply of cold and hot rolled coils remains robust, with no significant reduction in steel production. Data from the China Iron and Steel Association indicates that mid-May saw key steel enterprises producing a total of 22.09 million tons of crude steel, 19.79 million tons of pig iron, and 21.20 million tons of steel products. The daily average production of crude steel reached 2.209 million tons, a 0.81% increase from the previous ten days. Additionally, the operational rate of blast furnaces in major steel enterprises increased by 0.7 percentage points from the end of April. It is estimated that the national daily average production of crude steel in May will hover around 2.90 million tons. This ongoing high production level highlights a market characterized by strong supply and relatively weak demand, making it difficult for prices to rise significantly.

cold rolled coils

cold rolled coils

High Inventory Levels: Current inventory levels of cold and hot rolled coils remain high. As of mid-May, the inventory of hot rolled coils in 29 key cities across the country reached 2.88 million tons, an 11.05% increase from the same period last year. Similarly, cold rolled coil inventory stood at 1.46 million tons, up 21.58% year-over-year. Steel mill inventories also increased, with mid-May levels showing a 54.70 million ton increase from the previous ten days, a 3.36% rise.

Weakening Demand: One of the main reasons for the fluctuating market is the lack of significant improvement in downstream industries’ production and sales. Recent data shows a decline in the automotive and home appliance sectors, which are major consumers of cold and hot rolled coils. The China Passenger Car Association (CPCA) reported a 9% year-over-year decline in passenger car retail sales in early May, with manufacturers’ wholesale volumes dropping by 11%. Similarly, data from AVC indicates that offline retail sales for refrigerators, freezers, washing machines, dryers, and air conditioners in April fell by 13.2%, 6.6%, 10.8%, 8.4%, and 12.9%, respectively. This reduction in demand from key sectors has dampened the market’s ability to support higher coil prices.

Decreasing Cost Support: The cost of raw materials for steel production, such as iron ore, coke, and scrap steel, has been trending downward. In mid-May, the price of coking coal fell, with some varieties dropping by 50 yuan/ton. The coke market remained stable, with the fifth round of price increases underway. Scrap steel prices weakened, with major steel enterprises in East China reducing purchase prices by 30 yuan/ton, influencing surrounding scrap prices to fall by 10-40 yuan/ton. This decline in raw material costs reduces the cost support for steel prices.

Haihao Group’s Commitment

At Haihao Group, we understand the importance of staying informed about market conditions. We are committed to monitoring these changes closely and sharing insights with our customers. By keeping our clients updated, we help them navigate market uncertainties and make informed decisions.

We continue to strive for excellence in providing high-quality products and services, ensuring that our customers can rely on us for their piping system needs, regardless of market conditions. Stay connected with Haihao Group for the latest updates and expert analysis on the steel market.

For more information or to place an order, please contact our sales team. We are here to support your business with the best piping solutions.