Stainless Steel Production Declined in July, Rebounded in August

According to an SMM survey, China's crude stainless steel production in July 2024 was approximately 3.1838 million mt, down 1.44% MoM and 2.13% YoY. Among this, 200-series stainless steel production was 921,000 mt, up 0.52% MoM; 300-series stainless steel production was 1.5918 million mt, down 3.23% MoM; and 400-series stainless steel production was 671,000 mt, down 0.28% MoM.

In July, due to high temperatures, downstream operating rates significantly decreased, leading to weak overall demand and prompting stainless steel mills to reduce their loads. Some stainless steel mills in east and south China initiated maintenance plans, resulting in a reduction of approximately 21,000 mt in 200-series crude steel production and 48,000 mt in 300-series crude steel production. Notably, in the context of the off-season, there was a divergence in production strategies between state-owned and private steel mills: during the traditional off-season with weak demand and firm high-grade NPI prices, 300-series stainless steel prices were under pressure at low levels, and profits continued to shrink. Some private stainless steel mills shifted their 300-series capacity to 200-series and 400-series to reduce losses, while state-owned mills saw a decrease in 200-series and 400-series production but maintained stable 300-series production. This led to an overall reduction in 300-series production, while 200-series and 400-series stainless steel production remained stable, with even a slight increase in 200-series production.

Looking ahead to August, due to the expected demand during the traditional September-October peak season, stainless steel mills chose to increase production to prepare for September. According to the production plans of the steel mills, 300-series production in August is expected to increase by approximately 80,000 mt, up 5.16% MoM; while 200-series and 400-series production are expected to decrease by 2.3% and 4.92%, respectively, due to inventory pressure and continued decline in spot prices. From the perspective of agent orders, August orders are not ideal, with no advance stocking plans from downstream. Additionally, since the beginning of August, high-grade NPI transaction prices have risen to over 1,000 yuan/mtu. Given the difficulty in raising stainless steel prices and the expectation of profit losses, the increase in production is expected to face certain challenges.