Cost Price Fluctuations Amid News Disturbances, Stainless Steel Profits Narrow [SMM Analysis]

Published: Aug 7, 2026 15:38

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[SMM Analysis] Cost Fluctuations Under News-Driven Disturbances, Stainless Steel Profits Narrowed Stainless steel product prices and production costs pulled back slightly in tandem this week, leading to narrowed overall smelting profits at steel mills. Based on 304 cold-rolling calculations, the profit margin for the week stood at 1.7% when calculated with current raw materials, and 1.84% with inventory raw materials. Stainless steel mills still retained some smelting profits. For nickel-based raw materials, high-grade NPI prices consolidated on a strong note this week. During the week, SHFE nickel and SS futures experienced wild swings amid news of Indonesia’s RKAB supplementary quota, which led to fluctuations in NPI prices. Downstream steel mills are currently in the off-season for consumption and showed limited acceptance of high-priced raw materials. Moreover, the price swings further amplified the cautious wait-and-see sentiment, keeping overall purchasing activity subdued. As of Friday, the price of Indonesia-origin high-grade NPI with 10-12% grade in China rose 1.5 yuan/mt per nickel unit, to 1,138 yuan/mt per nickel unit on a cif basis including tax. Stainless steel scrap prices remained largely stable this week. Affected by the Indonesian news, SS futures saw wild swings, while spot products pulled back slightly but showed notable resilience. High-grade NPI prices held up well, and with the tug-of-war between longs and shorts, stainless steel scrap held steady, supported by its cost advantages. While expectations improved for better rigid demand amid the higher August production schedule, end-use demand in the off-season remained sluggish, steel mill profits were constrained, and the desire to bargain down prices persisted, limiting overall upside room. In the short term, prices are expected to maintain a broadly steady, consolidating pattern. As of Friday, mainstream 304 off-cuts in Shanghai were unchanged at 10,450 yuan/mt. For chrome-based raw materials, high-carbon ferrochrome prices pulled back slightly this week. Although the market expects stainless steel output to increase in August...

Stainless steel product prices and production costs both pulled back slightly this week, and steel mill smelting profits narrowed overall. Using 304 cold rolling as an example, the profit margins this week were 1.7% when calculated based on current raw materials and 1.84% based on inventory raw materials, with stainless steel mills still retaining some smelting profits.

Nickel raw materials side, high-grade NPI prices consolidated on a strong note this week. During the week, impacted by news of Indonesia's RKAB supplementary quotas, SHFE nickel and SS futures swung wildly, and NPI prices fluctuated accordingly. Currently, downstream steel mills are in the off-season, with limited acceptance of high-priced raw materials. Compounded by price fluctuations that further amplified the market's cautious wait-and-see sentiment, the overall purchasing momentum remained weak. By Friday, the delivered tax-inclusive price of 10-12% grade Indonesian high-grade NPI in China rose by 1.5 yuan/nickel unit to 1,138 yuan/nickel unit.

Stainless steel scrap prices held steady overall this week. Impacted by news from Indonesia, SS futures swung wildly, and stainless steel product spot prices pulled back slightly but showed resilience. High-grade NPI prices held up well. In the tug-of-war between longs and shorts, stainless steel scrap stabilized supported by cost advantages. Despite expectations of improved rigid demand from increased production schedules in August, end-use demand in the off-season was sluggish, steel mill profits were constrained, and the desire to bargain down prices was strong. Overall, upside room was limited, and short-term, a stable consolidation pattern is expected to persist. By Friday, the mainstream 304 off-cuts price in Shanghai was unchanged at 10,450 yuan/mt.

Chrome raw materials side, high-carbon ferrochrome prices pulled back slightly this week. Although the market expected an increase in stainless steel production in August, driving higher ferrochrome demand, ferrochrome production hit consecutive historical peaks, and supply was not tight. Although chrome ore traders recently strengthened their willingness to hold prices firm, against the backdrop of high industry inventories, actual upside room is expected to be limited. Therefore, ferrochrome prices are unlikely to break the subdued consolidation pattern in the short term. By Friday, the mainstream high-carbon ferrochrome price in Inner Mongolia fell by 75 yuan/mt (50% metal content) MoM to 7,950 yuan/mt (50% metal content).

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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