The year end board market will be embroiled in a tug-of-war between supply and demand

As the year draws to a close, the off-season characteristics of the domestic cold and hot-Rolled Coil market have become increasingly evident. Demand is weak, transactions are sluggish, and prices fluctuate.

As the off-season approaches, the prices of cold-rolled and hot-rolled coil plates are unlikely to experience significant fluctuations in the short term. The probability of a volatile market situation is not high, and it will mainly be consolidation. The main reasons are as follows:

First, the situation of weak demand in the short term is hard to change. Recently, the production and sales volumes of manufacturing industries such as automobiles and home appliances have declined. Data from the China Passenger Car Market Information Association shows that in the first ten days of November, the retail volume of the national passenger car market reached 415,000 units, a year-on-year decrease of 19%. Among them, the retail volume of the new energy vehicle market reached 265,000 units, a year-on-year decrease of 5%.

According to research by industry institutions, in November, the overall demand intensity for steel in the manufacturing industry will weaken, and the demand from major downstream industries such as automobiles and home appliances will decline. According to statistics, in November, the total production of air conditioners, refrigerators and washing machines in China decreased by 5% month-on-month, in sharp contrast to the growth trend in the same period of the past three years. This is mainly affected by factors such as the terminal retail sales falling short of expectations and the withdrawal of the “two new” subsidy policies in many places.

In terms of the real estate sector, data from the National Bureau of Statistics shows that in the first ten months of this year, the national real estate development investment reached 7,356.3 billion yuan, a year-on-year decrease of 14.7%, among which the investment in residential properties was 5,659.5 billion yuan, a year-on-year decrease of 13.8%. In the first ten months of this year, the floor area under construction of houses reached 6,52,939 million square meters, a year-on-year decrease of 9.4%. The newly started floor area of housing reached 490.61 million square meters, a year-on-year decrease of 19.8%. The completed floor area of houses reached 348.61 million square meters, a year-on-year decrease of 16.9%.

Second, supply pressure may be difficult to ease rapidly in the short term. During this period, although environmental protection and production line maintenance have had a certain impact on supply, the overall steel output remains high. Especially recently, some steel enterprises in North China that have completed maintenance have resumed production one after another. Coupled with the fact that there is still a certain profit in the production of hot-rolled coil at present, the production enthusiasm of steel enterprises remains high, which has led to an increase in steel output instead of a decrease, and the inventory of steel products has also grown.

The third is the fluctuation of the prices of raw materials and fuels for steel. In the first ten days of November, the prices of steel raw materials and fuels generally fluctuated. Recently, the price trends of raw materials and fuels for steel have been divergent. However, the cost pressure on steel remains significant. Coupled with the recent contraction in profits of steel enterprises, while production control and restrictions have increased, the willingness to hold prices has also strengthened. This will also curb a sharp decline in steel prices in the future.

cold sheet (1) cold sheet (6) HR SHEET-3 HR SHEET-9