Steel mills are gradually starting maintenance plans, and the supply-demand relationship is gradually balancing [SMM Analysis]

       This week, stainless steel spot prices stabilized from a downward trend due to the rise in futures. As of January 10, SMM Wuxi region's 304 cold-rolled coil prices were quoted at 12,800-13,000 yuan/mt, while hot-rolled prices were at 12,300-12,500 yuan/mt. The average price dropped by 37.5 yuan/mt WoW. On the supply side, starting from January, steel mills in east and south China began implementing maintenance plans. A short-process stainless steel mill in south China is expected to suspend production for maintenance from January 1 for approximately 1.5 months, potentially reducing total production by about 120,000 mt. This has resulted in undersupply of 400-series stainless steel at a steel mill in north China, with shortages in certain specifications. Although the overall planned production of 200- and 300-series has decreased, the market's sufficient inventory buildup has gradually balanced supply and demand. However, the market remains in a state of strong supply and weak demand. Coupled with the Chinese New Year holiday arrangements at the end of January, the overall operating rate and production schedule of stainless steel mills are expected to decline further. Total stainless steel production in January 2025 is expected to decrease by 8.53% MoM, with 200-series down 8.05%, 300-series down 8.98%, and 400-series down 7.9%. On the demand side, the off-season at year-end has deepened, and market shipments remain at low levels with little change from last week. On the raw material side, recent spot prices of NPI, high-carbon ferrochrome, and stainless steel scrap have continued to decline, with stainless steel scrap dropping by as much as 150 yuan/mt. Although stainless steel finished spot prices remain at low levels, the decline has been less pronounced and has even shown signs of stabilization. As a result, profits across all series have been slowly recovering, with the 400-series showing the most significant improvement due to the undersupply and strong demand in the market. Stainless steel prices in January are expected to stabilize or slightly increase after recovery.

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