The prices of profiles and hot coils have risen and fallen frequently recently, mainly due to the frequent price changes at the cost end and the market sentiment.

In terms of cost, according to the price monitoring of SunSirs, as shown in the figure above, the price of slabs rose from 3090 to 3190 on the 15th, and began to fall on the 19th. The price fluctuates frequently in the short term, and downstream demand starts slowly, and merchant funds are returned slowly, the price change at the cost end affects the profitability of the steel mill itself, and the influence is transmitted quickly. As shown in the figure below, it can be seen that most of the recent price adjustment operations of merchants closely follow the cost.

In terms of inventory, according to relevant data, last Friday (March 20) the Shanghai market profile warehouse conducted the same caliber survey and statistics, the angle of channel steel stock 80,400 tons, an increase of 0.07 million tons from last week. H-beam inventory was 85,900 tons, an increase of 20,300 tons from last week, and the profile inventory was still increasing. For the first time, steel mill inventory and social inventory for HRC and thread have both fallen. This shows that the current terminal demand is fully activated and the market sentiment will improve recently, but the total inventory is still 45% higher than the same period. With the increase in production and inventory decline, the destocking cycle will be longer than in previous years.

 In terms of the market, the spread of overseas epidemics in February and March led to the suspension of production and suspension of aircraft, automobile and other manufacturing industries in many countries, which had a greater impact on the demand for HRC terminals, and futures performance was more sensitive. Only last week (March 16-March 20), the main contract of spiral snails surged and fell, and the weekly amplitude exceeded 7.4%. Recently, the Ministry of Commerce issued news to optimize automobile purchase restrictions, and various regions have also introduced new consumer policies to benefit downstream industries such as automobiles. In the short term, the spot market should maintain a volatile operation. In the medium and long term, the profile and hot coil trend are better.

In summary, the SunSirs data analyst believes that the first turning point of steel stocks indicates that the downstream demand is accelerating to release and the fundamental trend has improved, but it is still facing a high inventory situation. Although downstream demand has begun to be fully released, the destocking cycle is long, and prices are vulnerable to market sentiment and cost-side factors in the short term. Particular attention should be paid to the follow-up development of the recent overseas epidemic. On the macro news, a number of domestic consumption stimulus policies have been introduced, which is good for the later period of steel products and will remain bullish in the medium and long term.

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