Stainless Steel Prices and Costs Pulled Back in Tandem, While Losses at Steel Mills Worsened [SMM Analysis]

This week, stainless steel spot prices and production costs pulled back in tandem, though the inversion between steel mill costs and prices worsened slightly. Taking 304 cold-rolled products as an example, based on same-day raw material prices, the full cost profit margin was -1.36% this week; calculated on raw material inventory costs, it reached 1.22%.

Nickel-series raw material costs, high-grade NPI prices stopped rising and turned downward this week. Stainless steel mills remained mired in the dilemma of inverted costs and prices, showing low willingness to accept high-priced high-grade NPI and a clear tendency to push for lower prices; coupled with lower SHFE nickel prices, traders offered discounts to drive shipments, pushing high-grade NPI prices lower. However, nickel ore prices remained firm, stainless steel production schedules stayed high, and although SHFE nickel weakened temporarily, it has recently rebounded, and is expected to see no deep decline going forward. As of this Friday, high-grade NPI with a grade of 10-12% fell by 10.5 yuan per nickel unit to 1,084 yuan/nickel unit.

Stainless steel scrap market, prices fell this week, jointly driven by bearish macro sentiment, weak futures performance, and pressure on both supply and demand. Geopolitical conflicts and hawkish remarks from the US Fed weighed on futures, dragging finished steel prices lower; weaker prices for substitute raw materials such as ferronickel and ferrochrome eroded support for stainless steel scrap; in addition, elevated yard inventory and tight tax invoice supply slowed the procurement pace of steel mills. Although stainless steel scrap still retained its economic advantage, this was insufficient to reverse the broader downtrend. In the short term, the market showed a pattern of “futures drag, weaker raw materials, and supply and demand under pressure,” and prices are expected to remain in the doldrums. As of this Friday, 304 off-cuts in Shanghai fell by 200 yuan/mt, with the latest quotation at about 10,050 yuan/mt.

Chrome-series raw material costs, high-carbon ferrochrome prices remained stable this week. Although chrome ore futures prices in the overseas market were steady, major stainless steel mills announced their April steel mill tender price for high-carbon ferrochrome during the week, up 150 yuan/mt (50% metal content) MoM. This increase was below market expectations and current retail quotations, and under pressure from the steel mill tender price, high-carbon ferrochrome was unlikely to rise in the short term. As of this Friday, high-carbon ferrochrome prices in Inner Mongolia were unchanged from last week at 8,650 yuan/mt (50% metal content).