Post-holiday steel price changes forecast

After the holiday, the steel market is expected to continue its weak adjustment trend. Prior to the break, domestic coating prices were on a steady upward trajectory due to rising steel mill costs. However, despite this increase, market demand did not keep pace, leading to a challenging situation for businesses and manufacturers, with sales remaining sluggish. From a current perspective, there hasn't been a significant increase in downstream purchases before the holiday, and normal buying levels have remained stable. The rising prices have created a wait-and-see attitude among buyers. In the short term, support from downstream sectors remains limited, while steel mills remain strong, leaving businesses caught in a difficult position. Overall, market sales pressure still exists, and inventory levels are manageable. However, poor buyer sentiment and high production costs are significantly affecting purchasing decisions. It is reported that major steel mills will likely maintain stable ex-factory prices after the holiday. Based on this, the post-holiday market is expected to continue its weak adjustment phase. Below, we analyze several key factors: 1. **Production Capacity Pressure and Market Adjustment** In January to August 2013, the output of galvanized plates increased by 10.8% to 27.962 million tons, while coated plate output decreased by 11.5% to 4.804 million tons. Meanwhile, coated plate exports rose by 16.8% to 5.172 million tons, and coated panel exports increased by 16.6% year-on-year. This shows that while coated plate production is rising, the production of coated plates is declining. Although downstream manufacturing demand slightly increased, the construction sector showed weaker performance, affecting overall domestic demand. On the other hand, export volumes improved significantly, bringing some pressure on the domestic market, especially regarding price balance between domestic and foreign markets. After facing anti-dumping measures and domestic market pressures, the rebound in export volumes has added uncertainty to the market. Therefore, the production pressure for coated plates is still high, while the adjustment in coated plate production is less obvious, and downstream demand is unlikely to show significant improvement in the near future. 2. **Long Process Cost Increases and Private Producer Operating Rates** Starting from June, steel mills began raising prices for HRC products, which led to a steady decline in the operating rates of private enterprises, with some companies operating below 25%. As upstream products in the long-flow process generate profits, it puts significant pressure on downstream companies. Currently, the utilization rate of coated products is low, with an average galvanized output of around 80% nationwide (excluding suspended capacity), and color coating production at 40–50%. With additional shutdowns, utilization rates may drop further by about 20%. While the market seems to be under control, and prices are positive, steel mills are also increasing risks for downstream private enterprises by raising hot and cold rolled prices, passing on a large portion of the risk and making it difficult for them to compete. 3. **Wait-and-See Sentiment in Price Adjustments** Currently, the market price is at an intermediate level compared to the 2007–2012 period. Steel mill ex-factory prices have slightly increased. Considering current iron ore prices, the production cost of SPHC (the upstream material for coated coils) is around 3,550 yuan per ton, plus additional costs, bringing the final market price to approximately 4,650 yuan per ton. Some hot coil producers are bidding near this level, but manufacturers have mixed views on the outlook. Private factories believe sales are weak and prices could still fall, while businesses remain more cautious. Regarding anti-dumping, increased coated plate exports—especially to Southeast Asian countries—have triggered some dissatisfaction. There are indications that China may re-initiate anti-dumping investigations into coated plates in November, which could affect market expectations and adjustment space in the coming period. 4. **Post-Holiday Expectations for the Domestic Color Coating Market** Historically, after the Chinese New Year, the market tends to start strongly and push prices higher. However, this year lacks clear policy support, and funding conditions are tighter, resulting in slightly weaker overall expectations. Looking back at previous years, the National Day holiday typically saw a slight price increase, but the duration of the rise varied. The current market environment differs from past years in three key ways: first, there was no significant pre-holiday demand consumption, as most buyers were waiting; second, steel mill costs remain strong, causing repeated price fluctuations without clear opportunities; third, market funds are slightly worse than in previous years, limiting capital availability and reducing market activity. Given these factors, post-holiday price adjustments are likely to remain weak, but short-term fluctuations should not be excessive, aligning better with current market conditions and buyer sentiment.

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