The probability of a significant price increase for both cold-rolled and hot-rolled coils in the near future is low.

In May, the domestic cold-rolled and hot-rolled coil market showed little improvement, with prices fluctuating. Steel traders generally held a cautious attitude towards the future market. On June 5th, Li Zhongshuang, General Manager of Shanghai Ruikun Metal Materials Co., Ltd., told a reporter from *China Metallurgical News* that under the influence of weak demand, the cold-rolled and hot-rolled coil market is expected to fluctuate and consolidate in the near future.

Li Zhongshuang explained that in the last week of May, the price of cold-rolled and hot-rolled coil in the Shanghai market fell by 40 yuan/ton. In the first week of June, the price continued to fall by 30 yuan/ton. Recently, safety rectification in Shanxi coal mines has pushed up the prices of coking coal and coke, increasing steel production costs. Coupled with the arrival of the seasonal off-season, it is expected that the price of cold-rolled and hot-rolled coil will be difficult to rise significantly in the short term. From the market transaction situation, the trading atmosphere in the cold-rolled and hot-rolled coil market has been sluggish during this period. End users are cautious in their purchases, mainly focusing on immediate needs. Steel traders are experiencing sluggish sales, and some merchants are choosing to accept customer price negotiations in order to move their goods, leading to further softening of steel transaction prices. Regarding the future market trend of cold and hot rolled steel coils, Li Zhongshuang believes that the probability of a significant price increase in the short term is low, and prices will mainly fluctuate and consolidate.

From the demand side, with the increase in hot and rainy weather, end-user demand has weakened significantly. Recently, the production and sales of home appliances and automobiles, which consume a large amount of cold and hot rolled steel coils, have declined. According to the latest production schedule report of my country's three major white goods industries released by industry institutions, in June, the total production of air conditioners, refrigerators, and washing machines was 30.04 million units, a decrease of 11.8% compared with the same period last year. Among them, air conditioner production was 15.23 million units, a decrease of 18.9% compared with the same period last year; refrigerator production was 7.83 million units, a decrease of 4.1% compared with the same period last year; and washing machine production was 6.98 million units, a decrease of 1.9% compared with the same period last year. At the same time, automobile sales are also declining. According to statistics, from May 1st to 24th, the national passenger car retail sales reached 989,000 units, a year-on-year decrease of 24% and a month-on-month increase of 10%. Since the beginning of this year, the cumulative retail sales of passenger vehicles nationwide have reached 6.594 million units, a year-on-year decrease of 19%.

"The decline in production and sales in the automotive and home appliance manufacturing industries has reduced demand for cold-rolled and hot-rolled coils, resulting in a lack of effective support for price increases," said Li Zhongshuang.

From the supply side, the current supply-demand imbalance in the cold-rolled and hot-rolled coil market remains unchanged, making it difficult to support a price rebound. Although some steel mills have adjusted their production schedules due to thin profit margins, overall hot-rolled coil production remains high, and steel inventories are also high. As of the end of May, the social inventory of hot-rolled coils in 35 major markets nationwide was 3.4012 million tons, an increase of 73,600 tons week-on-week, representing a growth rate of 2.21%. The same is true for the cold-rolled coil market, with both mill and social inventories at high levels. Li Zhongshuang believes that the strong supply-demand imbalance in the cold-rolled and hot-rolled coil market largely determines that prices are likely to fluctuate and decline in the later period.

From the cost side, the support for steel prices from raw material sources remains strong recently. In May, raw material prices showed a divergent trend: the average price of iron ore rose; two rounds of price increases for coking coal took effect; and scrap steel prices remained stable with a slight increase, but the average price fell. Due to the rise in iron ore and coking coal prices, the average monthly cost level of steelmaking increased. Entering June, the raw material market will be characterized by "high-level pressure on iron ore, firm high-level coking coal, and slight fluctuations in scrap steel prices." Overall, steel production costs will fluctuate at high levels, and the cost side will continue to provide resilient support for steel prices.