SMM Analysis On China September Stainless Steel Production And October Forecast

According to an SMM survey, the total stainless steel production in China in September 2024 decreased by 0.3% MoM and about 3% YoY, with a cumulative increase of about 3% YoY. Specifically, the production of 200-series stainless steel decreased by 6% MoM, while the 300-series increased by about 1% MoM, and the 400-series increased by about 4% MoM. The anticipated September peak season was missed, with stainless steel production and inventory at high levels, leading to severe oversupply. Both futures and spot prices dropped significantly, and with nickel ore prices remaining firm, 200 and 300-series stainless steel mills suffered losses greatly. In South China, stainless steel mills frequently announced maintenance or even shutdowns and production cuts, with a noticeable decline in 200-series production. However, there was a divergence in the 300-series; on one hand, NPI production in Indonesia and China climbed, and integrated stainless steel mills managed costs well, resulting in slight production increases or maintaining high operating rates. On the other hand, non-integrated stainless mills faced high costs and narrowing profits, leading to gradual production cuts. Some mills in South China resumed production after summer maintenance, resulting in a slight increase in 300-series production in September. For the 400-series, there was a significant increase, mainly due to a stainless steel mill in South China switching to 400-series production, combined with reduced costs amid a drop in chrome ore and ferrochrome prices in September while demand remained stable. Finished product prices held steady, and profits recovered, leading to an overall increase in operating rates for the 400-series stainless steel. Entering October, influenced by favourable macro factors, prices for all series of stainless steel rose. NPI and chrome manganese raw material prices declined in mid-to-late September due to negative feedback from stainless steel, leading to good profit recovery in October. Production schedules for 200-series stainless steel mills previously reducing production were also adjusted upwards. It is expected that the total stainless steel production in October will increase by about 1%, with the 200-series increasing by about 3.85%, the 300-series remaining roughly flat with some mills maintaining production cuts and a slight decrease of about 0.2%, and the 400-series production slightly increasing by about 0.3%.