According to SMM research, affected by the weak demand of automobile and home appliance terminals, the cold rolling order of steel mill is obviously weak, the spot price of cold rolling has dropped sharply, the cold and heat price difference has shrunk, and the cold rolling production of steel mill has entered into loss, which leads to the reduction of cold rolled products and the increase of hot rolled commodity products in some steel mills.
Figure 1: trend of price difference between cold and heat
Source: SMM
According to SMM estimates, the cold rolling output affected by maintenance and production reduction in April reached more than 400,000 tons, which prompted the original production of this part of the cold rolled base material to be converted into hot rolled commodity material, resulting in an increase in the pressure on the supply end of hot rolling. And some of the steel mills that cut production in April said that it was highly likely to continue the trend of reducing production in May, or even if the order did not improve, or would increase the reduction in production, which would increase hot rolling production. At the same time, in May, the maintenance of mainstream hot rolling mills returned to production, resulting in an estimated 30-400000 tons of hot rolling increments. Therefore, it is expected that the probability of hot rolling production will increase in May, which will increase the pressure on the supply side.
Table 1: inspection and repair table of hot rolling mainstream steel mills
Source: SMM
Details of the feedback from the steel mill are as follows.
AG (Northeast): due to the continuous weakness of the order and the loss of cold rolling production, it is planned to continue to reduce the production of cold rolling and increase the production of hot rolling in May.
BG (North China): due to the weak influence of blast furnace maintenance and cold rolling, cold rolling is expected to continue to reduce production in May, and the actual reduction depends on the final receipt of orders in May.
HG (North China): affected by poor cold rolling orders and production losses, cold rolling production is expected to be reduced by 50% in May, resulting in a corresponding increase in hot rolling output.
SG (East China): at present, the cold system receives the order poorly, and the production is in a state of loss. It is expected that in May, on the basis of ensuring the long Association, the production reduction in April will be maintained and the hot rolling output will be increased accordingly.
MG (Central China): affected by poor cold rolling orders and production losses, it is expected to continue to reduce cold rolling production and increase hot rolling production in May on the basis of production reduction in April.
WG (Central China): affected by the single difference between sealed city and automobile terminal and export restrictions, the steel mill made great efforts to reduce the production of cold rolling and hot rolling in April, and plans to continue the plan in May.
PG (Southwest): affected by the loss in cold rolling production, the steel mill currently has plans to reduce production, but it depends on receiving the order in May.
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