US steel market supply and demand and price analysis - hot rolled coil

Hot rolled coil

Supply:

In the United States and Europe, the output of hot-rolled coils began to rebound in 2010. It is expected that US production will increase by 20% to 25% this year, but its production level is still 80% of the normal level. It is expected that in 2011 and 2012, the output will be further increased on the basis of 2010. The supply of hot rolled coils in Asia is much stronger than in the United States and Europe. In 2009, the volume of hot-rolled coils in mainland China exceeded the peak level in 2008. Market analysts worry that the oversupply of hot rolled coil supply in mainland China will impact the export market price of hot rolled coils in the world, but this has not happened so far. The world ocean shipping price has a great impact on the world hot rolled coil import and export trade. In the middle and late period of the fourth quarter of 2009, the shipping price was very high. By the first quarter of 2010, the freight rate dropped significantly. High sea freight rates restrict the world's hot rolled coil import and export trade. The difference in hot rolled coil prices in various regions of the world is usually quite low. If the sea freight rate exceeds US$70 per tonne, buyers or users of imported hot rolled coils will not import overseas hot rolled coils because the FOB price of imported raw materials is US$50 per tonne lower than the local market price.

Demand:

Demand for hot rolled coils in the United States is improving, but it is still quite weak. U.S. auto production will increase by 20% in 2010 compared with 2009, but it is still one-third lower than in 2007, which will inevitably affect the end-user demand for hot rolled coils. As the demand for hot-rolled coils in most regions of the world declines significantly in 2009, the rebound will rebound slowly and gradually. In most regions of the world, the demand for hot rolled coil market is still lower than the level in 2008 until 2012 or later. Some, the demand for hot-rolled coils is expected to rebound. In most countries, household high-end consumer durables are the driving force behind the increase in the demand for hot-rolled coils. Among them, light-duty vehicles and household appliances are the most important end-users of hot-rolled coils. Due to increased unemployment and falling house prices, the demand for hot-rolled coils in the United States and many countries in Europe has decreased significantly. These two regions need a considerable amount of time before they can return to their original levels. In 2010, the strong demand for hot rolled coils in the world will come from developing countries, especially in Asia. In 2010, demand for hot rolled coils in mainland China rebounded much faster than in other regions, and will rebound back to 2008 peaks. The increase in demand is mainly from the construction industry rather than high-end durable consumer goods; at the same time, local automobile production is also increasing. However, the increase in the demand for local hot-rolled coils in the construction industry is not as much as the increase in long-length profiles.

price:

Demand for hot rolled coils in the United States was weak, and production capacity was idled and stopped, making it impossible to increase prices. The market price has not yet surpassed the production cost too much, and the manufacturer is not willing to reduce the price and lose sales. The idea of ​​a production plant intending to increase sales prices every quarter in 2010 will not be recognized or accepted by the market. In spite of this, each time the price of hot-rolled coils fell by a little less than the increase, the basic trend of prices rose. The price trend in 2011 is basically the same as in 2010. However, the price of hot rolled coils in 2011 will increase more strongly than in 2010.

In 2009, the market price of hot rolled coils in the United States fell to less than 400 US dollars per short ton, which was the first time since the beginning of 2004 that it dropped to the level of less than 400 US dollars. Even if the price rises back to 500 US dollars per short ton, it is also an unacceptable minimum price for manufacturers. If the market price of hot rolled coils in the United States drops to less than 500 U.S. dollars per short ton, its prices will quickly rebound. The production and operation environment of the Asian hot-rolled coil production plant is much better than the rest of the world. Although the market price of hot rolled coils in the United States rose in 2010, it did not go well. However, by the end of 2010, the market price of hot rolled coils will increase by 10%.