Introduction: In April, the price of the domestic coating market rose slightly, repairing some of the declines in March. However, with the over-fall of raw material prices in early April, the profits of steel mills have recovered, the production momentum has been enhanced, and the coating inventory has been slow. The price fluctuation of finished products is not large, mainly due to the slow recovery of demand and fierce market competition. In May, the south entered the rainy season, and extreme weather is frequent, outdoor construction may be greatly affected. The fourth round of coke at the raw material end has been raised and landed, giving strong support to the price of coated sheets, and the following will be briefly elaborated on the short-term coating market trend from the basic supply and demand side.
First, the supply remains high, and the operating rate is stable and strong
According to the statistics of China Iron and Steel Association, the output of galvanized sheet in March was 2.38 million tons, an increase of 320,000 tons year-on-year, an increase of 15.3%, and the cumulative output was 6.75 million tons, an increase of 620,000 tons year-on-year, an increase of 10.2%; (Note: The above is the data of 36 sample enterprises)
Lange research: As of April 25, our network has counted the sample of 53 steel mills across the country. Among them, there were 155 galvanized sheet production lines, with an operating rate of 85%, an increase of 4% from the end of last month, and 104 color-coated sheet production lines, 28 of which were suspended or overhauled, with an operating rate of 73%, unchanged from the end of last month. The average daily output of the sample data was 94,350 tons of galvanized sheet and 31,100 tons of color-coated sheet.
In April, the capacity utilization rate of steel mills continued to increase, the operating rate increased slightly, and steel mills continued to increase output supply to meet surging overseas demand after raw material prices bottomed out and profits were restored.
Second, the peak season is not prosperous, and the demand for coating is weak
1. The sales volume of galvanized sheet increased slightly
According to the statistics of the China Iron and Steel Association, the sales volume of galvanized sheet in March was 2.42 million tons, of which 230,000 tons were exported, and the production and sales rate was 101.9%. The market is consolidating, the downstream replenishes the warehouse on demand, and the transaction is basically based on rigid demand. (Note: The above is the data of 36 sample enterprises)
2. The price of cold-rolled base material has risen significantly
Recently, the implementation of macro policies has stimulated market sentiment with positive signals, and the transaction of base materials is good.
3. Automobile production and sales increased slightly year-on-year
According to statistics from the China Association of Automobile Manufacturers, in March 2024, vehicle production and sales reached 2.687 million units and 2.694 million units, up 78.4% m/m and 70.2% m/m and 4% and 9.9% y/y, respectively. From January to March, vehicle production and sales totaled 6.606 million units and 6.72 million units, up 6.4% and 10.6% y/y, respectively, making a good start to the first quarter. Automobile production and sales resumed growth in March. On the one hand, the price war of car companies stimulates the vitality of the market, and the preferential strength attracts customers to place orders. On the other hand, the state has repeatedly mentioned the trade-in policy, which has stimulated market expectations. In April, the new car releases of various car companies are more intensive, the market heat is still high, and there are more working days off in April than last year, which will further promote the increase in car sales.
In March 2024, China exported 502,000 vehicles, up 37.9% month-on-month, and the cumulative export volume from January to March was 1.324 million units, up 33.2%.
3. The growth momentum of the four major appliances is good
According to the National Bureau of Statistics, in March 2024, the national air conditioning output was 30.833 million units, a year-on-year increase of 13.2%, and the cumulative output from January to March was 68.780 million units, a year-on-year increase of 16.5%.
In March, the national refrigerator output was 9.934 million units, a year-on-year increase of 13.2%, and the cumulative output from January to March was 23.621 million units, a year-on-year increase of 12.8%. In March, the national output of washing machines was 9.324 million units, a year-on-year increase of 5.9%, and the cumulative output from January to March was 25.599 million units, a year-on-year increase of 13.8%.
In March, the national output of color televisions was 17.922 million units, a year-on-year decrease of 3.0 percent, and the cumulative output from January to March was 43.343 million units, a year-on-year increase of 0.2 percent.
The Ministry of Commerce and other 14 departments officially issued the "Action Plan for Promoting the Trade-in of Consumer Goods" and gradually began to implement it, which effectively drove the growth of demand for household appliances, and the demand for coated sheets for household appliances is bound to increase according to the increase in the output of household appliances.
After the GDP growth rate in the first quarter was released, Morgan Stanley, Goldman Sachs, UBS, and many other foreign institutions have raised their expectations for China's economic growth this year, indicating that the confidence of the foreign demand market is gradually recovering.
To sum up, in May, the order price of state-owned steel mills was sharply reduced, the operating rate increased slightly, and the market inventory digestion gradually returned to normal. The export of automobile and home appliances has grown rapidly, the export of coated sheet has reached new highs, and the growth contribution of overseas markets has gradually increased. However, the domestic market demand is still weak, dragged down by real estate, and the demand for coated sheets is difficult to recover for a while. Market confidence needs to be restored, and the upstream and downstream of the industrial chain still need to work together to maintain healthy development. On the whole, it is expected that the price of coated sheet market will fluctuate and rise in May. (Lange Steel, Meng Qingwen)