Raw Material Linkage Drives Scrap to Edge Up; Off-Season Restrains Market Gains [SMM Stainless Steel Scrap Weekly Review]

This week, stainless steel scrap off-cut prices in east China edged up, with a quotation range of 10,400-10,500 yuan/mt. Prices for the same specification in the Foshan area rose in tandem, with a price range of 10,300-10,600 yuan/mt. From a raw material cost perspective, the production cost for stainless steel using entirely stainless steel scrap stands at approximately 14,580.48 yuan/mt, while the cost using entirely high-grade NPI reaches 15,153.78 yuan/mt, maintaining a notable cost spread between the two.

Stainless steel scrap prices edged up this week. SS futures retreated after a rapid rise during the week, while spot stainless steel prices fluctuated relatively little and held up well, providing a stable foundation for the stainless steel scrap market. Meanwhile, the alternative raw material high-grade NPI market continued to hold up well, with prices ticking up slightly. The overall positive sentiment on the raw material side drove stainless steel scrap prices up in tandem. However, the market has now entered the traditional consumption off-season for stainless steel, with weak downstream end-use demand. Coupled with production cuts and maintenance at China’s steel mills, raw material demand expectations weakened somewhat. The unresolved issue of tight industry tax invoices continued to constrain market trading activity. At the same time, recent grade slippage in high-grade NPI required steel mills to supplement nickel content with high-grade nickel products. Combined with production process limitations, this made it difficult for stainless steel mills to significantly increase their use of stainless steel scrap. Although stainless steel scrap maintained a strong cost advantage over high-grade NPI, multiple bearish factors during the off-season offset the upward momentum, limiting upside room for prices. Overall, the stainless steel scrap market this week presented a slight uptrend characterized by “fluctuating futures, steady spots, raw material linkage, and off-season pressure.” The strong performance of NPI lifted scrap prices modestly, but weak off-season demand, tax invoice constraints, and process limitations suppressed the extent of the gains. In the short term, bullish and bearish factors are at an impasse, and subsequent stainless steel scrap prices are expected to hold steady.