[SMM Stainless Steel Daily Review] Finished steel and raw material prices pulled back in tandem, easing cost pressure; stainless steel smelting profits remained stable.

This week, stainless steel product and raw material prices pulled back in tandem, while steel mill profits remained basically stable with a slight pullback. Based on 304 cold-rolled category calculations, current raw material-based profit margin recovered to 1.42%, achieving positive profitability; however, dragged by previously high-priced inventory raw materials, inventory raw material-based profit margin remained at -2.54%, with destocking pressure still not fully alleviated on actual profitability.

This week, nickel pig iron raw material prices declined notably. Under macro headwinds, SHFE nickel moved lower, and NPI market sentiment turned pessimistic; demand fell amid expectations for production cuts at stainless steel mills, coupled with lower purchase prices for stainless steel scrap during the week, further pressuring high-grade NPI prices, with prices in the doldrums amid broadly bearish market sentiment. As of this Friday, the delivered duty-paid price of 10-12% grade Indonesian high-grade NPI in China fell 17.5 yuan/nickel unit to 1,022.5 yuan/nickel unit.

This week, stainless steel scrap prices declined. Under macro headwinds, SS futures moved notably lower, coupled with steel mills lowering product guidance prices, spot prices pulled back, creating direct pressure; high-grade NPI and high-carbon ferrochrome declined in tandem, steel mill purchase prices were lowered, and stainless steel scrap struggled to chart an independent course. Although the cost advantage of stainless steel scrap over high-grade NPI widened, unresolved tax invoice issues, cautious year-end purchasing by steel mills, and continued declines in production schedules meant weakening demand was hard to reverse, with prices expected to remain in the doldrums in the short term. As of this Friday, mainstream 304 off-cuts in Shanghai held steady at 9,700-9,800 yuan/mt, tax-exclusive.

This week, chrome-based raw material prices pulled back slightly. After the National Day holiday, high-carbon ferrochrome prices declined steadily, falling to their lowest level since 2025, with current retail prices notably below mainstream stainless steel mill procurement prices in October, reflecting pronounced market pessimism. With chrome ore prices declining after the holiday, cost support for ferrochrome further loosened; although ferrochrome producers faced losses, prices remained in the doldrums. As of this Friday, high-carbon ferrochrome prices in Inner Mongolia fell 25 yuan/50 base mt MoM to 7,450-7,700 yuan/50 base mt.

Overall, NPI, stainless steel scrap, and ferrochrome all weakened in tandem, driving stainless steel smelting costs lower, with current raw material-based profit margin turning positive. Looking ahead, expectations for production cuts at steel mills persist, raw material demand-side support remains insufficient, and the weak pattern for high-grade NPI and stainless steel scrap is unlikely to change in the short term; although ferrochrome producers are already facing losses, with chrome ore cost support loosening, the price bottom still needs to be solidified. In summary, the raw material side will remain in the doldrums overall, and stainless steel costs still have room to move lower, but the drag from high-priced inventory raw materials will continue to constrain steel mills' actual profitability.