Since mid-October, cold rolled steel coil and hot rolled steel coil market trends have not been as volatile as in the previous decade in China. The prices of cold rolled and hot rolled coils have tended to be stable, and market trading conditions are acceptable. Steel traders are basically cautiously optimistic about the market outlook. On October 20, Li Zhongshuang, general manager of Shanghai Ruikun Metal Materials Co., Ltd., said in an interview with a reporter from China Metallurgical News that the cold and hot rolled steel in coil market is expected to be stable in the short term.
The demand for cold and hot rolled coils is expected to increase. Since the beginning of this year, China's economy has continued to recover. On October 18, the National Bureau of Statistics released the performance of the national economy in the first three quarters of 2023. The GDP in the first three quarters was 91.3027 billion yuan. Calculated at constant prices, GDP increased by 5.2% year-on-year, and the economy continued to recover. At the same time, the manufacturing industry continues to pick up. Data show that the manufacturing industry grew by 4.4% in the first three quarters, of which the added value of the equipment manufacturing industry increased by 6.0%, 2.0 percentage points faster than all industries above designated size. In addition, in September, the manufacturing purchasing managers index (PMI) was 50.2%, an increase of 0.5 percentage points month-on-month, returning to the expansion range. The index has risen for four consecutive months, and the month-on-month increase has continued to expand.
Of particular concern is the improvement in production and sales of manufacturing industries such as automobiles and home appliances, which have a large demand for cold and hot rolled steel coils. The "three new products" of new energy vehicles, lithium batteries, and photovoltaic products continue to maintain rapid growth momentum. In the first three quarters, the cumulative exports of the "Three New Products" increased by 41.7% year-on-year, maintaining a high growth rate. Monitoring data from relevant agencies show that in September, China’s offline retail sales of color wires increased by 10.7% year-on-year. From the perspective of specific categories, offline retail sales of refrigerators, freezers, washing machines, stand-alone clothes dryers, and air conditioners increased by 18.2%, 14.3%, 21.7%, 41.6%, and 20.4% respectively year-on-year; among major kitchen and bathroom products, range hoods The offline retail sales of gas stoves, dishwashers, integrated stoves, electric water heaters, and gas water heaters increased by 4.1%, 2.1%, 1.9%, 0.3%, 1.3%, and 2.5% respectively year-on-year. According to statistics from the Passenger Car Market Information Joint Conference, in the first half of October, retail sales in China's passenger car market reached 796,000 units, a year-on-year increase of 23% and a month-on-month increase of 14%. Among them, the retail sales of new energy vehicles reached 294,000 units, a year-on-year increase of 42% and a month-on-month increase of 8%.
The supply pressure on the cold and hot-rolled coil market is expected to be alleviated. Affected by the continuous decline in steel prices in China, the profits of steel companies have shrunk, and many companies are facing losses. Some steel companies have taken the initiative to limit or reduce production. Data from the National Bureau of Statistics showed that in September, China's crude steel output was 82.11 million tons, a year-on-year decrease of 5.6%, and the decline was 2.4 percentage points faster than in August; the average daily steel production was 2.737 million tons, a month-on-month decrease of 1.8%. At present, China's crude steel output has declined month-on-month for three consecutive months.
Rigid costs support the stabilization of cold and hot-rolled coil prices. Recently, steel raw material and fuel prices have remained strong. In September, the main contract prices of "double-coke" (coking coal, coke) rose sharply, and iron ore prices also showed an upward trend. Since the second half of this year, coal mine accidents have occurred in many places in China. Local governments have strengthened mine safety production and safety inspections have been intensified, which has had a certain impact on coal supply. In September, two rounds of increases in coke prices have been fully implemented, with a cumulative increase of 200 yuan/ton, and the third round of increases is on the way.
In terms of iron ore, it has recently been reported that Australia is considering adjusting the list of "critical minerals" or including commodities such as iron ore. "If it is true that Australia intends to restrict the export of iron ore, coking coal and other products to China, it will undoubtedly push up the smelting costs of my country's steel." Li Zhongshuang said that the strong rise in steel raw and fuel prices has led to an increase in the production costs of steel companies. However, rigid costs will also support the stabilization of cold and hot rolled steel coil prices.
Post time: Oct-30-2023