[SMM Analysis] Next week, the price of Shanghai oriented electrical steel will be in the doldrums, with a possibility of a slight price drop

Original Article

Price Dynamics of Grain-Oriented Electrical Steel

Shanghai B23R085 grade: 14,100-14,300 yuan/mt

Wuhan 23RK085 grade: 14,000-14,200 yuan/mt

This week, the price of grain-oriented electrical steel in Shanghai also remained stable, with sluggish market transaction atmosphere and overall performance falling short of expectations.

The considerable fluctuations in the HRC futures market had a certain impact on the market sentiment for grain-oriented electrical steel: earlier, driven by the strengthening expectations for a US Fed interest rate cut and the positive news of 30%-50% production restrictions to be implemented by coking coal enterprises before the September 3 military parade, the market held expectations for the short-term trend of ferrous metals series varieties. Traders of grain-oriented electrical steel maintained stable quotes and adopted a wait-and-see attitude. However, with the emergence of rumors about the government's strict inspection of export orders, the failure of market expectations for new coal mine safety regulations to shut down small and medium-sized coal mines, the increase in transaction fees, and the expectation that DCE would cool down the coking coal market, the follow-up market trend ended, and the futures market experienced a deep correction. This affected market confidence in grain-oriented electrical steel, and some traders showed signs of slightly reducing prices to accelerate capital turnover.

On the fundamental side, the supply of grain-oriented electrical steel in the market remained stable, with conventional order resources from some steel mills gradually arriving at the trading end, resulting in a relatively abundant supply of goods in the market. However, the downstream industries are still in the off-season for demand. Major downstream enterprises such as transformer and motor manufacturers have low procurement enthusiasm, mainly focusing on digesting previous inventory and only conducting small-batch, on-demand restocking according to production plans, providing limited support for market prices.

Looking ahead to next week, as the impact of news-related factors gradually fades, the grain-oriented electrical steel market may return more to being dominated by off-season fundamentals. Considering the current adequate market supply and weak demand-side support, it is expected that the price of grain-oriented electrical steel in Shanghai will most likely remain in the doldrums next week, and there is a possibility of slight price reductions for some specifications due to inventory pressure.

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