In the short term, the price of cold and hot rolled coils will fluctuate and fall
In late May, the cold and hot rolled coil market oscillated, and prices began to fall after a sharp rise at the beginning of this month. It is expected that the market price of cold and hot rolled coils will fluctuate and fall back in the short term, and there is little room for further rise in the later period.
Last week, the price of cold-rolled coil fell by 600 yuan/ton, and the price of hot-rolled coil fell sharply by 950 yuan/ton. Regarding the market outlook, in terms of supply, demand, cost, etc., the cold and hot rolled coil market will maintain its current operating trend in the short term. As the later seasonal consumption season enters the off-season, steel prices will usher in a callback. Specifically, the main factors affecting the operation of the cold and hot rolled coil market in the later period are as follows:
First, the release of market demand for cold and hot rolled coils will slow down
From the perspective of the production and sales of downstream industries such as automobiles and home appliances, the market demand for cold and hot rolled coils will decrease in the later period. Data show that in April, my country's car sales reached 2.252 million units, an increase of 8.6% year-on-year; passenger car sales reached 1.7 million units, a year-on-year increase of 10.8%; new energy vehicle sales reached 206,000 units, a year-on-year increase of 180.3%. At the same time, automobile production has decreased.
In early May, the output of 11 key domestic auto companies reached 369,000 vehicles, a year-on-year decrease of 11.9%. Among them, passenger vehicle production reached 299,000, a year-on-year decrease of 6.2%; commercial vehicle production reached 70,000, a year-on-year decrease of 30.2%. The impact of chip supply interruption on my country's auto companies will continue in the future. In addition, the China Automobile Association predicts that the chip supply problem may continue until January next year. The decline in automobile production will be a major factor affecting the demand for cold and hot rolled coils in the later period.
In terms of home appliances, domestic home appliance manufacturers have raised prices since the beginning of this year in response to cost pressures. In the first quarter of this year, leading home appliance companies such as Midea chose to raise prices. The "May 1st" holiday was supposed to be the traditional "discount season" for my country's home appliance industry, but this year ushered in a wave of "price increases", with the average selling price of home appliances rising by 5% to 20%. The price increase of home appliances will be transmitted to consumers, which will reduce market demand, which will affect the demand for cold and hot rolled coils.
The second is that the supply and demand of the cold and hot rolled coil market will maintain a basic balance
At present, steel companies have considerable profitability. In addition to being affected by environmental protection and production restrictions, they are basically producing at full capacity, and steel production including cold and hot rolled coils continues to grow. Data show that in early May, the average daily crude steel output of key domestic steel companies reached 2.4178 million tons, an increase of 18,000 tons month-on-month, an increase of 0.75%. At the same time, steel stocks have continued to increase. In early May, the steel inventory of key domestic steel companies reached 14.683 million tons, an increase of 1.27 million tons from the previous month, an increase of 9.47%.
Third, under the support of rigid cost, steel enterprises raised the ex-factory price of steel
Since the beginning of this year, the price of imported iron ore has been showing a significant increase. On May 12, the Platts 62% iron ore index reached 233.1 US dollars/ton, a historical record. The seventh round of increase in the coke market has already landed, with a cumulative increase of 720 yuan/ton. Many coke companies are currently preparing for a new round of increase. Although by May 25, the Platts 62% iron ore index had fallen back to US$191.6/ton, and scrap prices had also fallen sharply, the cost pressure faced by steel companies was still considerable.
Under the support of cost, a group of large steel companies raised the ex-factory price of sheet metal in June, among which the price of cold and hot rolled coil was raised by at least 300 yuan/ton. It is expected that the market procurement cost will increase significantly, which will curb the sharp decline in the market price of cold and hot rolled coils in the later period.
Fourth, the rapid rise in commodity prices has attracted national attention
On May 23, five ministries and commissions including the National Development and Reform Commission and the Ministry of Industry and Information Technology held a meeting to jointly interview key enterprises in the iron ore, steel, copper, and aluminum industries. The meeting pointed out that since the beginning of this year, the prices of some bulk commodities have continued to rise sharply, and the prices of some varieties have reached new highs, which has attracted widespread attention from all parties.
This round of price increases is the result of a combination of multiple factors, including international transmission factors and excessive speculation, which have contributed to the price increase.
In the next step, the relevant regulatory authorities will closely track and monitor the price trends of bulk commodities, strengthen the joint supervision of bulk commodity futures and spot markets, "zero tolerance" for illegal activities, continue to increase law enforcement inspections, investigate abnormal transactions and malicious speculation, and resolutely follow the law. Strictly investigate and punish violations of the law, such as reaching a monopoly agreement, spreading false information, driving up prices, and hoarding. It is expected that the trend of commodity prices may usher in an inflection point in the third quarter.