Futures and Raw Material Linkage Boosts Stainless Steel Scrap Market, Off-Season Pressure Persists, Limiting Gains [SMM Stainless Steel Scrap Weekly Review]

This week, 304 stainless steel scrap off-cuts prices in east China edged up, with a quotation range of 10,500–10,600 yuan/mt; in Foshan, stainless steel scrap of the same specification also edged up, with a price range of 10,400–10,700 yuan/mt. From a raw material production cost analysis, the current cost of producing stainless steel entirely from stainless steel scrap stands at approximately 14,701.1 yuan/mt, while production using entirely high-grade NPI reaches 15,168.67 yuan/mt, with the two still maintaining a significant cost price spread.

This week, stainless steel scrap prices edged up. During the week, improving macro sentiment boosted SS futures, with the rally in futures transmitting to the spot market, driving spot prices of stainless steel products edge up; at the same time, purchase transactions in the high-grade NPI market recovered somewhat, with raw material prices rising in tandem. Futures, steel products, and alternative raw materials formed a linked supportive pattern, pushing stainless steel scrap prices to strengthen and rise this week. Although the rise in high-grade NPI prices this week narrowed the economic advantage of stainless steel scrap relative to it, the overall cost advantage remains quite prominent, continuously providing bottom support for stainless steel scrap prices and ensuring the market holds up well.

Overall, short-term positives drove a slight upward move in scrap, but bearish constraints still persist in the market. The market has now officially entered the traditional consumption off-season for stainless steel, with frequent news of production cuts and maintenance at stainless steel mills across the industry, and market expectations for stainless steel scrap demand are gradually weakening; at the same time, the issue of tight tax invoices in the industry remains not fully resolved, continuing to constrain market trading activity. Under the dual pressure of weakening off-season demand and unresolved industry pain points, future stainless steel scrap prices will struggle to rise, with an overall risk of a pullback.