Under the pressure of achieving the goal of “a negative year-on-year increase in crude steel output for the year”, steel companies have continued to increase their production cuts, the demand for iron ore has decreased, the price of ore has fallen, and the steel cost platform has moved downward. At the same time, the demand release slowed down due to the influence of power restriction policies in downstream industries such as the manufacturing industry. Li Zhongshuang predicts that under the influence of “weak supply and demand”, the market price of cold and hot rolled coils will show obvious weakness in the near future.

Looking back at the market situation in mid-to-early October, at the beginning of the "Silver Ten", the cold and hot rolled coil market ushered in a "good start". On October 8, the first trading day after the National Day holiday, the hot-rolled coil price in Shanghai market rose by 80 yuan/ton, and the cold-rolled coil price stopped falling and rebounded, rising by 10 yuan/ton to 30 yuan/ton; Today, the price of hot-rolled coils rose again by RMB 40/ton to RMB 50/ton. However, entering the second trading week of October, affected by the sharp drop in the price of hot-rolled coil in the futures market, the price of cold- and hot-rolled coil in the spot market fluctuated and fell. On October 12, the main contract price of hot-rolled coil futures fell by 3.62%. In the same day, the spot price of hot-rolled coil fell several times, with a cumulative decline of 120 yuan/ton, and the spot price of cold-rolled coil also fell by 20 yuan/ Ton. As of October 15, compared with October 8, the main contract price of hot-rolled coil futures fell by RMB 73/ton.

Li Zhongshuang believes that from the perspective of supply and demand, the weak characteristics of the cold and hot rolled coil market will continue for some time.

First, the effective demand intensity of downstream terminals is unlikely to increase significantly in the short term.

From the perspective of the automobile industry, statistics from the China Association of Automobile Manufacturers show that in September, China's automobile production and sales reached 2.077 million and 2.067 million respectively, up 20.4% and 14.9% month-on-month, and down 17.9% and 19.6% year-on-year. In the first nine months of this year, China's automobile production and sales reached 18.243 million and 18.623 million, respectively, up 7.5% and 8.7% year-on-year, and the growth rate continued to drop compared with the first eight months of this year. From the perspective of profit, the National Bureau of Statistics data shows that since the beginning of this year, the year-on-year growth rate of profit realized by China's automobile manufacturing industry has fallen to single digits, with a significant decline. Li Zhongshuang believes that it is unlikely that the shortage of chips in the automotive industry will be effectively alleviated before the end of this year. It is expected that the automotive industry will still have limited demand during the year.

From the perspective of the home appliance industry, although the export volume of the manufacturing industry showed a downward trend in the second half of this year, due to the resilience of domestic consumption, the decline in the export volume of the manufacturing industry was slightly slower and the rate of decline was slow. The production of the enterprise has caused a considerable impact. Recently, the China Household Electrical Appliances Association has received feedback from some member companies. They said that the power curtailment policy and the sharp increase in shipping prices have had a certain impact on the production and operation of the company. It is expected that the demand for home appliances will drop significantly during the year.

Li Zhongshuang predicts that in the fourth quarter, the production and sales of downstream industries such as automobiles and home appliances will not be significantly improved, and the demand for cold and hot rolled coils will not increase significantly, and there will be limited motivation to support the price increase of cold and hot rolled coils.

Second, staggered production has an impact on the pace of market resource release. On October 13, the General Office of the Ministry of Industry and Information Technology and the General Office of the Ministry of Ecology and Environment jointly issued the "Notice on Launching Staggered Production in the Iron and Steel Industry in the Heating Season from 2021 to 2022 in Beijing-Tianjin-Hebei and Surrounding Areas", which will organize "2+26" cities Iron and steel smelting enterprises within the scope of implementation of the heating season staggered production work. According to the requirements of the notice, this work goal is divided into two stages: the first stage, from November 15, 2021 to December 31, 2021, to ensure the completion of the target task of reducing crude steel production in the region; the second stage , From January 1, 2022 to March 15, 2022, with the goal of reducing the increased emissions of air pollutants during the heating season, in principle, the ratio of peak staggered production of steel companies in the relevant regions shall not be lower than that of crude steel in the same period of the previous year 30% of output. Many people in the industry believe that the impact of this policy on later supply will exceed market expectations, and the Winter Olympics starting in early February 2022 will have higher air quality requirements, which will inhibit the release of supply from the steel industry.

In addition, the "Key Regions 2021-2022 Autumn and Winter Air Pollution Comprehensive Treatment Plan (Draft for Comment)" issued by the Ministry of Ecology and Environment will also have an impact on market supply. In this year’s policy, the restricted areas involved 6 provinces and 65 cities, 26 more prefectures and cities than last year. The scope of control covers most areas of Beijing-Tianjin-Hebei, Henan, Shandong, Shanxi, and Shaanxi. Big. Li Zhongshuang predicts that, judging from the current reduction in crude steel output, the output of cold and hot rolled coils will continue to decline during the year, which will also curb the subsequent decline in the market price of cold and hot rolled coils to a certain extent.