Stainless Steel Prices and Costs Rise in Sync, Steel Mill Profits Slightly Recover but Struggle to Rise [SMM Analysis]

This week, stainless steel prices and production costs both rose, slightly widening profit margins at steel mills. Using 304 cold-rolled as the benchmark, the raw material cost-based profit margin stood at 2.31%, while the inventory cost-based margin reached 2.59%.

On the nickel-based raw material cost side, high-grade NPI prices rose sharply this week. Driven by both the strong SS futures and the gradual release of downstream procurement demand during the week, high-grade NPI prices climbed in tandem. Market expectations for further price increases remain relatively strong, with significant willingness to hold prices firm, suggesting high-grade NPI prices will fluctuate upward in the near term. As of this Friday, mainstream high-grade NPI with 10%-12% nickel content gained +9 yuan/nickel unit to close at 1,149.5 yuan/nickel unit.

In the stainless steel scrap market, scrap prices edged up this week, buoyed by stronger futures, higher finished product prices, and a recovery in high-grade NPI, which provided clear cost support. However, the market has entered the traditional off-season, and frequent steel mill production cuts have weakened demand expectations, while tax invoice issues constrained trading activity. Although short-term positive factors drove firmer prices, upward momentum struggles under the combined pressure of weak off-season demand and lingering industry pain points, with a pullback risk emerging. As of this Friday, mainstream 304 off-cut prices in Shanghai gained +100 yuan/mt to a latest quote of approximately 10,550 yuan/mt.

On the chrome-based raw material cost side, high-carbon ferrochrome prices continued to edge down this week. Although recent reports of tight electricity supply in the Mengxi region of Inner Mongolia emerged, the impact on local high-carbon ferrochrome production is expected to be relatively limited, and ferrochrome enterprise operating rates are forecast to remain high. Additionally, inventories at chrome ore ports continued to climb, while chrome ore prices maintained their downward trend, providing weak cost support for ferrochrome, suggesting high-carbon ferrochrome prices will remain soft. As of this Friday, mainstream high-carbon ferrochrome prices in Inner Mongolia fell by 50 yuan/mt (50% metal content) WoW to close at 8,225 yuan/mt (50% metal content).