Steel Pail Raw Material Situation: Analysis Of The Current Market Situation Of Cold-rolled Coils
Overview: Cold-rolled coils, that is, cold-rolled steel coils, are the main raw materials for the production of steel pails, metal buckets, tin cans and other metal packaging. The analysis and understanding of this market will help us grasp the development trend of the metal packaging market. In recent years, affected by global economic fluctuations, industrial chain reconstruction and the "dual carbon" goals, cold-rolled coils, as an important subdivided product in the steel industry, are undergoing profound changes in the market operation logic. On the one hand, the demand differentiation of downstream industries such as automobiles and home appliances has intensified, and the supply and demand pattern has shifted from "tight balance" to a period of surplus; on the other hand, macro policies such as domestic and foreign production capacity regulation, trade barriers, and green transformation are further reshaping the industry's competition rules. Against this background, this article will analyze the current market situation of cold-rolled coils from three dimensions: supply and demand relationship, cost pressure, and macro policies, combined with industry data, and explore future development trends.
1. Analysis of the supply and demand relationship
The cold-rolled market presents a structural contradiction of "high capacity and low inventory". The core is that steel mills give priority to the production of high-profit varieties of steel, resulting in a contraction in the supply of general materials. Cold-rolled prices are relatively strong. Low inventory may support the overall resistance of cold-rolled prices to decline, but the momentum for the rise of general materials is insufficient.
1. Long-term high capacity utilization
According to the data, the capacity utilization rate of cold-rolled coils will rise to more than 80% in 2025, and at the same time, social inventory will fall below 1 million tons in January. This seemingly healthy combination of "high start-up and low inventory" has a real motivation analysis. First, the profit-oriented production of steel mills: enterprises concentrate on the production of profitable varieties, and cold rolling has the best profit performance among its related series of products. There is still a gross profit margin of 300 yuan/ton in its link. Steel mills conduct selective production under the strategy of "maintaining cash flow".
Secondly, it is driven by short-term behavior: steel mills take advantage of the raw material price window period to produce in a rush. In the first quarter, the price of hot-rolled raw materials was weak, but compared with the previous two years, the price was still low, and the price difference between hot and cold was maintained at 600-800 yuan/ton. The concentrated production of cold rolling may be driven by the short-term behavior of steel mills. High production capacity may quickly turn into inventory pressure, especially in the context of low inventory, and the space for replenishment is limited.
2. The characteristics of "passive destocking" are obvious, and the track of variety steel is upgraded.
From the trajectory of inventory data changes, data in the past three years show that the market has entered the destocking stage since the end of 2024. Through field research and data analysis, it is found that the current market presents a typical "passive destocking" feature, which mainly comes from two aspects: First, traders have taken the initiative to withdraw from the risk-averse behavior due to cost pressure. Since January, state-owned resource traders have been under pressure to deliver funds normally every month without profit because the post-settlement price is close to the market monthly average price. In 2025, the inventory of large market agent traders will be reduced by about 40%. Second, the steel mills have received good orders for automotive steel, the amount of commodity coils entering the market has decreased, and the export performance is good, resulting in more domestic resources than last year, especially in the northern region. The market circulation has decreased significantly this year, and the relatively strong cold-rolled prices are also due to this aspect.
Although the export volume will drop slightly in 2025, it will show an overall upward trend over the past three years, indicating that the international demand for cold-rolled products continues to be strong. Although the callback in 2025 is affected by the periodic demand saturation, the overall growth of cold-rolled export demand has been significant in the past three years, and the market potential is large. It is necessary to pay attention to the subsequent stability and the impact of changes in the external economic environment. Exports are affected by trade barriers such as anti-dumping and tariff policies, and the growth rate of demand may slow down. It is recommended that enterprises maintain production capacity flexibility and closely follow the policy and demand trends of the target market.
As the main demander of cold-rolled thin plates in China, the automobile manufacturing industry is mainly used for body structures and coverings such as doors, roofs, and fenders, and other parts such as chassis and seat frames. The growth rate of production and sales slowed down to 3.7% in 2024, but exceeded 14% in the first quarter of 2025. The significant rebound in growth rate shows that the demand for automobile terminals is relatively strong. Affected by the "old for new" policy, a new round of subsidies in 2025 will stimulate the short-term demand for fuel vehicles. The steady growth of the automobile industry directly drives the demand for cold rolling. The high-strength cold rolling track has attracted the attention of many steel mills. Although the demand for automobile manufacturing has rebounded, most of the orders for automobile plates are monopolized by state-owned steel mills. State-owned cold-rolled general material resource traders have failed to make direct profits. The amount of general material flowing into the market is getting smaller and smaller, and ordinary cold rolling may face overcapacity.
2. Cost support weakens, and profits in the industrial chain shift to the cold rolling link
From the first quarter of the previous two years, when the gross profit of cold rolling was basically in the red, to the first quarter of this year, when the gross profit fluctuated around 200 yuan/ton, its profit came from the downward impact of the hot-rolled coil price caused by the downward price of iron ore and coke on the raw material side: under the loose supply, the average price of coking coal also moved down, and the price of 61.5% PB powder (Rizhao Port) broke below 800 yuan/ton, the cost of molten iron dropped significantly, and the profit of the industrial chain shifted to the cold rolling link, which led to the passive effect of the redistribution of profits in the industrial chain. The loss of coking plants led to a decrease in the cost of molten iron in steel mills, so the profit of cold rolling processing expanded through the profit concession of hot rolling. Cold rolling enterprises purchased hot rolling at a lower price, but the price of cold-rolled finished products decreased less due to its variety stability, and the gross profit margin expanded. The reduction in cost prices made the profit of cold rolling more objective. The northern region is also because there are many long-process steel mills, and the raw material advantage can offset the difference in freight. This profit structure is fragile to a certain extent. When the price of raw materials rises, it will swallow up most of the gross profit. If the bankruptcies of coking enterprises cause the supply chain to break, the cost transmission mechanism will fail, which will indirectly affect the cold rolling cost or a sudden increase. The degree of damage depends on the price transmission cycle. Therefore, the current gross profit level is still not enough to support the sustainable development of the industry. We need to be vigilant against the trap of "small profits but quick turnover" and give priority to orders with positive cash gross profit.
3. Uncertainty on the macro policy
Structural impact of industrial policies: The new version of the "Implementation Measures for Capacity Replacement in the Steel Industry" in 2024 directly constrains the cold-rolled coil industry, requiring new projects to be equipped with deep processing facilities. This policy has led to obvious differentiation in the industry, and the leading enterprises have accelerated their layout. Groups such as Baowu and Angang Steel mainly optimize the product ratio. The capacity of high value-added products such as automotive plates and home appliance plates has increased to more than 60%, and the replacement ratio of 1.5:1 has increased the transformation cost of small and medium-sized enterprises by about 30%, and they have to face the survival dilemma.
Monetary policy leads to a differentiated effect. The central bank's targeted reserve requirement reduction policy has a stratified effect in actual implementation. The actual financing cost of private steel mills is more stressful than that of state-owned enterprises, resulting in the fact that private enterprises' cold-rolled products must maintain a premium of more than 150 yuan/ton to maintain the same profit level.
Strategic adjustment of foreign trade policy, structural changes have occurred after the implementation of the RCEP agreement. Export market transfer: According to data from the China Iron and Steel Association, cold-rolled exports to ASEAN will increase by 40% in 2024, but the average unit price will drop by about 8%, showing the characteristics of "increase in volume and decrease in price". Import substitution is accelerating: the import volume of high-end cold-rolled plates in Japan and South Korea has dropped by 15%, and the localization rate of domestic automobile OEMs has increased to 65%.
Future risk points are mainly concentrated on the impact of the US tariffs on exports and the upgrading of overseas anti-dumping measures. Enterprises need to enhance their risk resistance by strengthening policy prediction, optimizing production capacity layout, and increasing product added value.
IV. Summary
The current cold-rolled coil market presents a structural contradiction of "high capacity and low inventory". The overall cold-rolled capacity is sufficient, the production load of steel mills is high, but the actual circulation resources are tight. During the same period, both social inventory and steel mill inventory were at a low level, especially the circulation of general material resources decreased compared with the previous two years, while the orders for special steel were good and the production schedule accounted for a high proportion, which supported the price of cold-rolled products. However, from the perspective of macro-policy interpretation, the US tariff increase policy may promote the conversion of cold-rolled exports to domestic sales, and the increase in domestic cold-rolled return resources may suppress the domestic general material spot market price, but the impact on special steel due to strong domestic demand is relatively small.
Low inventory is not a healthy signal, and we need to be vigilant against the risk of a mismatch between supply and demand again. It is recommended that market participants optimize production scheduling, balance the ratio of special steel and general materials, and avoid over-reliance on a single market. Strengthen the research and development of high-strength steel technology to consolidate the advantages of the high-end market. Traders purchase general materials on demand to avoid inventory backlogs, pay attention to the order dynamics of terminal enterprises, and terminal enterprises plan procurement plans in advance to lock in the long-term agreement price of special steel. The real recovery of the industry needs to wait for the confirmation of the three signals of real estate stabilization, manufacturing investment recovery, and export market resumption of stable growth. Before that, maintaining a cautious business strategy will be the key to survival and development.
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