Short-Term Positive Factors Exhausted, Stainless Steel Peak Season Underperforms, Raw Material Prices Struggle to Rise, Price Inversion Narrows [SMM Analysis]

This week, stainless steel spot prices and production costs remained basically stable with relatively small changes, and the losses at stainless steel mills narrowed. Taking 304 cold-rolled products as an example, based on the raw material prices of the day, the cash cost increased by about 9.16 yuan/mt this week, with the loss ratio reaching 5.42%; if calculated based on the raw material inventory cost, the cash cost decreased by about 16.19 yuan/mt, and the loss rate remained at 1.98%.

On the nickel-based raw material cost side, high-grade NPI prices continued to rise this week, but the upward momentum has slowed down. Although it is still the traditional peak consumption season, the stainless steel market has been underperforming, with SS futures in the doldrums and stainless steel spot prices struggling to rise. Stainless steel mills are facing losses due to cost-price inversion and have low acceptance of high NPI prices. In addition, most enterprises have completed their October procurement and stockpiling, leading to a slowdown in market transactions and weaker price trends. As of Friday, the price of high-grade NPI with 10-12% grade accumulated an increase of 1 yuan/mtu, finally settling at 954.5 yuan/mtu. In the stainless steel scrap market, the peak season has been underperforming, with stainless steel finished product prices as well as nickel and chromium prices struggling to rise, and stainless steel scrap prices also in the doldrums. Compared to high-grade NPI, the economic advantage of stainless steel scrap has further increased. As of Friday, the price of 304 off-cuts in east China remained basically stable, with the latest offer at about 9,750 yuan/mt.

On the chrome-based raw material cost side, high-carbon ferrochrome prices remained generally stable this week, with further upward momentum encountering significant resistance. During the week, the overseas futures price of South African chrome concentrate ore with 40-42% grade increased slightly by $1, reaching $280/mt, while the spot ore price remained basically unchanged. Ferrochrome producers are generally profitable, and the previous tight supply situation has been largely alleviated. As the month-end approaches, the October steel tender is expected to be announced soon, and the market still holds bullish expectations for the ferrochrome tender. However, due to the lack of upward momentum in stainless steel prices recently and the cost-price inversion at stainless steel mills, the expected increase is limited, and market retail prices have also become more rational, with the overall trend remaining stable. As of Friday, the price of high-carbon ferrochrome in Inner Mongolia held steady, finally settling at 8,500 yuan/mt (50% metal content).