SunSirs: The Prices of Weak Supply and Demand Coils Continue to Decline (8.5-8.9)

Price trend

This week, the price of the board continued to fall sharply, with expectations of a Fed interest rate cut heating up and the Japanese yen raising interest rates, leading to increased concerns in the market about a global economic recession; Domestic demand is weak, most of the country's high temperature weather, local rainstorm, limited terminal procurement demand, superimposed on the replacement of old and new national standards, the overall market trend is weak. According to the Commodity Market Analysis System of SunSirs, as of August 9th, the average price of hot-rolled coils in the domestic market was 3430 RMB/ton, a decrease of 1.55% compared to the previous week; The average price of cold-rolled sheet in the domestic market is 3840 RMB/ton, with a weekly decrease of 0.97%.

Analysis review

According to the latest data obtained from SunSirs, the social inventory of hot-rolled products this week was 3.4888 million tons, an increase of 83800 tons compared to last week. The weekly output was 3.0356 million tons, a decrease of 198900 tons compared to the previous week; This week, the social inventory of cold-rolled products was 1.4297 million tons, a decrease of 35900 tons from last week. The weekly output was 811300 tons, a decrease of 38100 tons compared to the previous week.

This week, the production of molten iron decreased significantly by 49200 tons to 2.317 million tons, and steel mills suffered severe losses, accelerating the production reduction process and driving destocking, easing supply pressure to some extent.

Cost aspect

This week, the price of iron ore first fell, then rose, and then fell again, with a narrow range of fluctuations. As of the 10th, the SunSirs iron ore price index was 780.56, a month on month decrease of 0.83%. The price of black series futures has weakened, and the negative feedback of steel market to iron ore; At the same time, with the significant reduction in steel mill profits and the maintenance of high port inventory levels for the year, the fundamentals are bearish on iron ore prices. It is expected that iron ore will continue to exhibit narrow range fluctuations and weaken operations next week.

This week, the coke market has been operating weakly, with a quasi first grade metallurgical coke ex factory price of 1835 RMB/ton as of July 10th. The profit situation of coke enterprises is still acceptable, and they will continue to maintain their previous production status. With the continuous decline in finished product prices, the profits of steel mills have been compressed. Recently, there has been a significant increase in blast furnace maintenance, and it is expected that there is still a large reduction space for molten iron. The coke market has a strong bearish sentiment.

Market outlook

Under the macro influence of foreign countries, steel futures continue to decline, market operations are weak, steel mills are losing profits, blast furnace capacity utilization is declining, supply side is decreasing, demand is still not optimistic, and the supply-demand situation is showing a weak pattern. The cost side is running weakly, and there is insufficient support for prices. Until there is a clear positive trend, it is expected that coil prices will continue to operate steadily and weakly.

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