November 2020 is an unusual month for steel mills and traders of cold-rolled and galvanized varieties. It is also a month in which both galvanized coils and cold-rolled coils have increased nationwide. October 2021 is also a month worth remembering, but the market trend this time is completely opposite to that in December last year. After the National Day holiday, the market began to fall. It did not fall slowly until mid-October, and then entered a rapid downward channel in late October. Regarding the current market situation, there are not many optimists and many cautious people in the market. Some customers believe that prices have fallen by nearly 1,000 yuan this month, and there is limited room for decline in the future. Some customers also believe that steel prices should fall enough to have more opportunities to rebound. So why is the price of cold-rolled galvanizing so sharply reduced? Let’s discuss the reasons behind it.

In terms of cold rolling, before August, the capacity utilization rate of cold rolling mills nationwide had been maintained above 80%. After August, the capacity utilization rate had been maintained below 80%, and dropped to 72% in October. Since mid-July, the capacity utilization rate of galvanized steel plants has been below 70%, and has been as low as 63.76%, constantly refreshing this year's low level. The low capacity utilization rate of cold-rolled galvanized steel can also reflect the weak demand in the market. In the case of low cold-rolled galvanizing capacity utilization, the market has not yet improved significantly, which has once again suppressed market confidence.

From a psychological point of view, an index greater than 50 means expansion or increase or rise, while an index less than 50 means flat. In terms of market mentality, the market was still full of confidence in early October, mainly because of the expectations of Silver Ten. Therefore, in the first week after the National Day, the market mentality index was above 60. When the market fell, demand performance was sluggish, and the market mentality also fell rapidly from 710.775 on October 8 to 34.075 on October 5. Cold rolling dropped from 710.775 on October 8 to 34.075 on October 5. From 66.11 to 19 on the 5th, galvanizing was no exception. From 79.52 to 19.44, market confidence came under pressure several times and became extremely fragile.

On the basis that the current downstream demand is difficult to significantly improve, the further decline in raw material costs has led to a further decline in the cost of cold-rolled galvanizing. Since the decline in late October, market transactions have repeatedly been sluggish. During the decline, the loss of early high-priced resources has further expanded, and market confidence has been suppressed many times. The short-term profitability factor lies in whether the northern heating season can bring about the impact of production restrictions. Major steel mills will take the initiative to reduce production after completing the overcapacity reduction task in 2021. In the later stage, we need to pay attention to the profitability of steel mills and the market inventory situation.