Overview: After the rebound in cold-rolled coil prices in December-January, prices fluctuated at highs. Meanwhile, the price spread of cold-rolled coils widened, and the hot-cold price spread also fluctuated at highs. The main reasons are: consumption during the off-season for cold-rolled coils was not weak, with high apparent demand leading to continuous inventory reduction. In December-January, strong supply and demand for cold-rolled coils supported a price rebound followed by high-level fluctuations. With the Chinese New Year holiday approaching, the market gradually entered a recess. What will be the trend of cold-rolled coil prices after the holiday?
I. Cold-Rolled Price Review
After entering December, cold-rolled coil prices rebounded with fluctuations. The main reason was that apparent demand for cold-rolled coils in December 2024 increased by about 5% YoY. To respond to the anticipated tariff policies after Trump took office, home appliance and car makers increased export orders, boosting consumption demand for cold-rolled coils. In terms of supply, although cold-rolled coil production remained higher than the same period last year, logistics were affected by weather conditions, slowing overall market arrivals. This led to a slight supply-demand mismatch in December, causing cold-rolled prices to rebound with fluctuations. Entering January, as car makers completed their year-end push for annual targets and export orders ended, coupled with the Chinese New Year holiday approaching, market trading activity gradually cooled. However, due to strong bullish sentiment among steel mills, high settlement prices for resources, and relatively low inventory pressure, market traders showed a strong sentiment to stand firm on quotes, resulting in cold-rolled coil prices fluctuating at highs in January.
II. Supply Side
According to the latest SMM tracking, the planned production volume of cold-rolled commercial materials by 31 mainstream steel mills in January totaled 4.423 million mt, up 51,200 mt or 1.17% from the actual production in December. In January, steel mills received good orders for cold-rolled products, and the production schedule for cold-rolled coils at 31 domestic steel mills increased slightly MoM. Regarding February production, according to the SMM survey, steel mills currently have no plans for additional maintenance of cold-rolled production lines. Moreover, with high profits from cold-rolled production, steel mills are highly motivated to produce. In summary, February cold-rolled production is expected to remain relatively unchanged from January.
III. Demand Side
The main consumption sectors for cold-rolled coils are the automotive, home appliance, and hardware manufacturing industries, with other downstream sectors accounting for a relatively small proportion of total consumption. After entering November-December, some home appliance companies maintained good production schedules to secure export orders. In the automotive sector, as the year-end approached, car makers pushed for annual targets, resulting in good production schedules. The year-end surge in high apparent demand for cold-rolled coils led to continuous inventory reduction. Additionally, after entering winter, logistics and transportation were affected by weather conditions, slowing the inflow of northern resources into the market. This delayed the inventory buildup turning point compared to last year. According to the SMM survey, due to the impact of the Chinese New Year holiday, home appliance production schedules in February are expected to decline slightly MoM. In the automotive sector, with the year-end push for annual targets completed, car makers' production schedules and orders in February are also expected to decline slightly MoM.
IV. Conclusion
In terms of cold-rolled supply and demand, with the Chinese New Year holiday approaching, the market is gradually entering a recess, and consumption momentum on the demand side is gradually weakening. The pressure from sustained high production on the supply side will gradually transmit downstream to the market, and inventory pressure will gradually emerge. However, as the inventory buildup turning point for cold-rolled coils came later this year, market inventory pressure remains relatively low. In summary, considering that the supply-demand imbalance for cold-rolled coils in February is still not significant, cold-rolled coil prices are likely to continue fluctuating at highs.
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