Stainless steel products and costs edge up in tandem, steel mill profits remain stable [SMM Analysis]

This week, stainless steel product prices rose slightly alongside production costs, leaving steel mills' smelting profit largely stable. Based on 304 cold-rolling calculations, the profit margin was 2.15% using current raw materials and 1.11% using inventory raw materials this week, indicating that stainless steel mills still retained some smelting profit.

On the nickel-based raw material side, high-grade NPI prices were largely stable this week. Although SHFE nickel and SS futures held up well overall, stainless steel remained in the traditional consumption off-season, and mills' purchasing demand for NPI stayed persistently weak, with limited actual transactions recently. Amid the tug-of-war between longs and shorts, NPI prices remained steady this week. As of Friday, the domestic delivered duty-paid price for Indonesian high-grade NPI at 10-12% grade was stable at 1,132.5 yuan per nickel unit.

This week, stainless steel scrap prices edged up, driven by SS futures gains that lifted spot prices. However, the temporary stability of high-grade NPI prices narrowed scrap's economic advantage. With the market still in the traditional consumption off-season, downstream demand was weak, and mills remained cautious in procurement, focusing mainly on need-based transactions. Under the dual constraints of sluggish demand and fading substitution benefits, stainless steel scrap lacked upward momentum and was expected to stay largely stable with limited upside room in the short term, supported by futures resilience. As of Friday, mainstream 304 off-cuts prices in Shanghai rose 200 yuan/mt to 10,450 yuan/mt.

On the chrome-based raw material side, high-carbon ferrochrome prices were stable this week. Although the ferrochrome supply remained relatively ample, and demand pulled back amid stainless steel production cuts during the off-season, the recent arrival of high-cost chrome ore, combined with a market-wide wait-and-see sentiment ahead of steel mill tenders, kept prices steady with no significant movement. On Friday, mainstream stainless steel mills announced their August tender prices for high-carbon ferrochrome, down 200 yuan/mt (50% metal content) MoM, suggesting spot prices would likely gradually converge toward the tender price. As of Friday, mainstream high-carbon ferrochrome prices in Inner Mongolia were flat MoM at 8,075 yuan/mt (50% metal content).