Macro Tailwinds Drove Stainless Steel Prices Higher, Furnace Charge Overall Weak as Steel Mill Inversion Narrowed [SMM Analysis]

Stainless steel spot prices rose this week, but production costs pulled back somewhat, narrowing the degree of cost-price inversion for stainless steel mills. Taking 304 cold-rolled products as an example, based on same-day raw material prices, the full cost profit margin was -0.36% this week; calculated using inventory raw material costs, the margin was -0.83%.

Nickel-based raw material costs: high-grade NPI prices remained in the doldrums this week. Stainless steel enterprises continued their earlier cautious purchasing strategy, and recent high-grade NPI transactions remained sluggish. Although high-grade NPI still had cost support, offer prices continued to edge lower under shipment pressure. As of this Friday, high-grade NPI with a grade of 10-12% fell 1.5 yuan per nickel unit, closing at 1,080 yuan/nickel unit.

Stainless steel scrap market: stainless steel scrap prices remained generally stable this week. Although SS futures performed strongly, the transmission effect on stainless steel spot prices was limited, and scrap prices saw no significant boost. On the alternative raw material front, high-grade NPI was weak and ferrochrome prices declined, providing limited support for stainless steel scrap. The cost-effectiveness advantage of stainless steel scrap still existed, and rising stainless steel finished product prices also provided some support. However, strong cost pressure on steel mills, their strong desire to bargain down prices, and weak market demand collectively constrained price increases. Prices are expected to remain stable in the short term. As of this Friday, 304 off-cuts prices in Shanghai remained stable, with the latest quote at approximately 10,150 yuan/mt.

Chromium-based raw material costs: high-carbon ferrochrome prices continued their downward trend this week. Although April stainless steel planned production remained at a high level, insufficient end-use demand support made it difficult for stainless steel prices to rise, which in turn weighed on market expectations. In addition, the production cut plans previously set by ferrochrome producers have had limited effect so far, and ferrochrome supply remained at a high level. Recent market transactions were overall sluggish, and producers had to slightly lower their offer prices under shipment pressure. As of this Friday, high-carbon ferrochrome prices in Inner Mongolia fell 75 yuan/mt (50% metal content) WoW, closing at 8,550 yuan/mt (50% metal content).