Cold Rolled Coil Market Plays Contrary Game; Falls in China and USA but Improves in Germany

With the week ending on June 7^th, the global Cold Rolled Coil market exhibited varied price movements across key regions. In the US, prices decreased marginally during the week ending June 7^th, amid a complex market environment characterized by increased supply, geopolitical tensions, and declining demand. Meanwhile, Germany saw a slight price increase, driven by supply constraints and moderate demand. In China, prices declined, influenced by rising stockpiles and subdued demand due to economic challenges.

The prices for Cold Rolled Coils in the US market decreased by 0.4% during the week ending June 7^th. This marginal decline in prices was accompanied by a challenging market environment characterized by surging supply, geopolitical tensions, and waning demand. Import levels plummeted, while indices like the Producer Price Index for Metals and Metal Products mirrored the prevailing market uncertainties. Concurrently, the sluggish construction sector contributed to a notable decrease in the demand for Cold Rolled Coils, evidenced by the decline in total construction spending and activity. Major steelmakers, such as JSW Steel USA Ohio, reported significant drops in production volumes, further exacerbating the situation. Additionally, preliminary findings by the US Department of Commerce regarding Posco's pricing practices exerted further pressure on the market. Indices like the Producer Price Index for Rolled Steel Shape Manufacturing recorded declines, signalling lower Cold Rolled Coil prices. Compounding these challenges, the US manufacturing sector exhibited signs of contraction, as reflected by the decline in factory activity reported in May 2024. This slowdown in manufacturing could potentially lead to lower demand for steel products, including Cold Rolled Coils, exerting downward pressure on prices. Notably, according to data from FRED, the Producer Price Index by Industry for Total Manufacturing Industries declined by 1% in May, further reflecting the lower manufacturing activity in the USA.

Germany's Cold Rolled Coil market witnessed a slight 0.4% increase in prices, primarily driven by persistent supply constraints and moderate demand levels. The supply side faced challenges due to limited availability of raw materials and scrap, leading to a slower decline in production. By mid-second quarter, production fell modestly, marking the smallest decline since May 2023. Increased supplier delivery times and rising energy costs further compounded the supply constraints. Additionally, geopolitical tensions and disruptions, particularly the Red Sea crisis, contributed to higher shipping costs, significantly impacting expenses related to ore and ferrochrome. On the demand side, the German Cold Rolled Coil market experienced moderate activity, largely due to subdued purchasing from the downstream construction sector. However, in the automobile industry, total registrations for the January-May period showed an increase, providing a potential boost to demand. Furthermore, figures published by the Federal Statistical Office (Destatis) revealed that producer prices for industrial goods intended for domestic sales witnessed a 3.3% contraction in April 2024. This downward trend in producer pricing appears to have persisted through May, mirroring the waning manufacturing activity across the German market during that period.

In China, Cold Rolled Coil prices experienced a downturn of 0.3% during this period, driven by several factors. This decline was primarily attributed to a rise in stockpiles at Chinese steel mills, coupled with subdued demand, while the streamlining of production further narrowed profit margins. Amidst the global market dynamics, the Cold Rolled Coil sector witnessed a modest rise in availability, largely propelled by Hebei province's steadfast production expansion. This growth narrative was further bolstered by a significant uptick in Pig Iron accumulated output, suggesting a strengthening of raw material inventory across manufacturing domains. However, the demand for Cold Rolled Coil in China's domestic market remained sluggish due to challenges in the real estate sector and broader economic headwinds, leading to a cautious outlook reflected in the business activity expectation index and a slowdown in new orders for coil. Furthermore, in May, according to the National Bureau of Statistics (NBS), China's manufacturing industry recorded a Purchasing Managers' Index (PMI) of 49.5 percent, marking a 0.9 percentage point decrease compared to the previous month. This decline in the PMI reflects a downturn in the overall health of the manufacturing industry.

According to ChemAnalyst analysis, escalating demand from downstream industries in the USA is expected to influence Cold Rolled Coil prices. A potential recovery in the construction sector could drive increased purchasing activity and propel the prices of Cold Rolled Coil upwards. Furthermore, efforts by the German government to rejuvenate the Cold Rolled Coil and other steel sectors are expected to drive prices higher. Additionally, the burgeoning demand from the Chinese automotive industry could elevate global demand for Cold Rolled Coil, potentially impacting future price trajectories in an upward direction.