February-March Outlook: Cold and Hot Rolled Price Spread Continues High Volatility, SMM Analysis

February-March Cold and Hot Rolled Price Spread to Continue Fluctuating at Highs, SMM Analysis"

Summary: From January to February, cold-rolled coil prices surged before fluctuating and pulling back, accompanied by a narrowing of the cold and hot rolled price spread, though it still fluctuated at highs. The narrowing of the price spread was mainly due to the fluctuating decline in cold-rolled prices, which actively narrowed the spread. For cold-rolled coils, in terms of supply, current cold-rolled profits are relatively good, and steel mills have high enthusiasm for production. Cold-rolled production is expected to remain at high levels from January to February. On the demand side, due to the impact of the Chinese New Year holiday and the off-season for consumption, apparent demand for cold-rolled coils declined MoM during January-February. The supply-demand imbalance has led to a rapid inventory buildup of cold-rolled coils.

As for HRC, from January to February, although it also faced a supply-demand imbalance and off-season inventory buildup, supported by favorable macro expectations and strong cost support, HRC prices fluctuated rangebound overall during January-February.