Price trend

This week, the coil market fluctuated weakly, with a main decline in the early part of the week. The hot rolled coil showed a reversal trend after a pullback at the end of the week, but the rebound was limited. As of July 12th, the macro policies in the steel market were tending towards stability, but there will be an important meeting held in July, and there are expectations of policy speculation in the market. In the market, weak trading sentiment and unstable demand during the off-season constrain the rebound space of coil prices. According to the Commodity Market Analysis System of SunSirs, as of July 12th, the average price of hot-rolled coils in the domestic market was 3,706 RMB/ton, a decrease of 1.33% compared to the previous week; The average price of cold rolled sheet in the domestic market was 4,070 RMB/ton, a decrease of 1.27% compared to the previous week.

Factors affecting price fluctuations:

Fundamentals

According to the latest data obtained from SunSirs, the social inventory of hot rolled products this week was 3.3154 million tons, an increase of 0.5 million tons compared to last week. The weekly output was 3.3148 million tons, an increase of 51,900 tons compared to the previous week; This week, the social inventory of cold rolled products was 1.4816 million tons, an increase of 0.41 million tons compared to last week. The weekly output was 851,900 tons, a decrease of 0.33 million tons compared to the previous week.

This week, the social inventory of sheets and rolls continued to increase, mainly due to weak downstream demand combined with weak market conditions during the week, cold market trading, lacked of confidence, and inventory accumulation. The production of hot rolled coils continued to be at a high level. Due to the expansion of losses in steel mills, the utilization rate of cold rolled sheet production capacity had slightly decreased by 0.32%, and the production cycle hasd slightly declined.

Cost side

This week, the price of iron ore first fell and then rose, fluctuating and falling back, with a month on month decrease of 2.00%. The iron ore inventory continued to accumulate, and steel mills were cautious in purchasing according to demand. The trading atmosphere was average, and it is expected that the iron ore market will fluctuate in the short term.

This week, the domestic coke market remained stable, and the steel coke game continued. The ex factory price of quasi first grade metallurgical coke was 1,906.67 RMB/ton, which was the same as last week. As the price of coking coal fell, the marginal profit of coking enterprises increased, shipments were more active, and inventory in the factory remained low. The profit situation of steel mills was not good, and their willingness to accept high-level raw materials was not high. However, due to the tight supply side in the early stage, steel mills' inventory remained low, and there was still strong demand for replenishment. The supply and demand of coke were in a tight balance, and it is expected that the trading price of coke will remain stable.

Market outlook

As of July 12th, the demand in the spot market was sluggish, and the support of raw material prices was average. In the short term, the price of coils may fluctuate. The meeting will be held next week, and close attention should be paid to industry related policies.

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