1、 Price analysis this week

Last week, the prices of color coated sheet and galvanized sheet fell sharply. At the weekend of two weeks ago, Tangshan billet fell sharply, resulting in a sharp decline in coke and iron ore futures at the beginning of last week. The mood of merchants in the spot market was depressed, and the price followed the plunge. The price of galvanized sheet fell by 200-350 RMB/ton, and the price of color coated sheet fell by 50-200 RMB/ton. Futures turned red late last week, but market demand has not been released for a long time, and prices are under upward pressure.

According to the price monitoring of the SunSirs, as of April 27, the spot price of 0.5*1200 color coated plates in Shanghai was about 8150 RMB/ton; The spot price of 1.0*1250 galvanized sheet in Shanghai is about 5690 RMB/ton.

2、 Reasons affecting steel market

Steel plant

Last week, the losses of private steel mills increased, adding to the greater pressure on merchants' funds at the end of the month. The operation was mainly based on delivery and payment collection, and merchants' quotations also made more profits. However, recently, coke and iron ore prices have moved down, and profits are expected to rebound this week.

Upstream and raw materials

As of the 27th, the average price of domestic hot coil market was 4400 RMB/ton, and the average price of cold rolling market was 4893.33 RMB/ton. At the beginning of last week, coke and iron ore futures fell sharply, and the price of hot and cold coils fell again, as for the low point of the year. Market panic continues to spread, and traders continue to increase the margin of profit. In the late part of the week, the coil oversold and rebounded, coupled with the rebound in billet prices, and the quotation was slightly increased. However, the downstream was not willing to buy, and the overall transaction did not improve significantly.

At present, the profits of steel mills are seriously insufficient, and the falling prices continue to be transmitted to the upstream. Steel mills began to suppress raw material prices and began to limit production in succession to seek the balance between supply and demand, but it still takes time to reshape the balance through production reduction. It is understood that last week, the inventory of hot-rolled coil was 2.7296 million tons, with a weekly increase of 32400 tons; Cold rolled sheet inventory was 1.353 million tons, an increase of 12700 tons on a weekly basis.

On the whole, the inventory of the Treasury in the society is still high, the characteristics of the off-season are obvious, the demand and consumption are not active, and the pressure of resource digestion is large. Based on the current macro positive release, and after this round of sharp decline, the downward pressure on the steel market has been released, and there may be a possibility of shock bottoming in the short term.

Downstream aspect

The news of stimulating the consumer market of automobiles and household appliances on the policy side has been constantly launched. Up to now, local bond issuance has exceeded 1.27 trillion in June. According to the passenger Federation on June 23, the overall market discount rate of passenger cars in mid June was about 13.3%, and the overall price was expanded compared with last month (12.8%). With the recovery of the consumer market, manufacturers strive to hit the sales target for half a year. According to the retail target survey in June, manufacturers accounting for about 80% of the overall market have achieved double-digit year-on-year growth. It is preliminarily estimated that the retail market of narrow passenger vehicles this month is about 1.83 million vehicles, with a year-on-year growth of 15.5%.

According to the latest data from the General Administration of customs, China exported 4.99 million air conditioners in May 2022, a year-on-year decrease of 19.2%; From January to may, 28.52 million units were exported, a year-on-year decrease of 7.8%. In May, 5.31 million refrigerators were exported, a year-on-year decrease of 18%; From January to may, 26.49 million sets were exported, a year-on-year decrease of 12%. In May, 1.5 million washing machines were exported, a year-on-year decrease of 17.9%; From January to may, 7.92 million units were exported, a year-on-year decrease of 19.1%.

3、 Aftermarket forecast

To sum up, it is expected that the rise and fall of short-term coating prices will be a dilemma, and the overall decline will narrow. As the main obstacle, weak reality still needs time to digest, but after the price has fallen sharply, some downward pressure has been removed.

If you have any questions, please feel free to contact SunSirs with support@sunsirs.com.