Cost Advantages Fail to Offset Weak Demand, Stainless Steel Scrap Prices Decline [SMM Analysis]

This week, the price of 304 stainless steel scrap off-cuts in east China weakened and declined to 9,600-9,700 yuan/mt, while the price of 304 stainless steel scrap off-cuts in Foshan also declined to 9,400-9,700 yuan/mt. Currently, based on raw material calculations, the production cost of stainless steel using entirely stainless steel scrap is approximately 13,417.11 yuan/mt, and the production cost of stainless steel using entirely high-grade NPI is approximately 13,704.2 yuan/mt. This week, a steel mill in south China purchased 304 stainless steel scrap molten steel at 9,150 yuan/mt.

This week, the prices of stainless steel finished products, high-grade NPI, and high-carbon ferrochrome all declined simultaneously. The persistent inversion of costs and selling prices for stainless steel mills has made it difficult to reverse, leading to a significant reduction in companies' purchase willingness for high-priced raw materials. Affected by this pessimistic market sentiment, the price of stainless steel scrap also fell. Although stainless steel scrap still has a clear cost advantage compared to high-grade NPI, under the overall cautious and wait-and-see market atmosphere, the trading activity in the stainless steel scrap market was noticeably insufficient this week. At the same time, the poor performance of stainless steel mills' May futures orders has exacerbated the inversion of costs and profits, strengthening expectations for production cuts. Additionally, the subsequent impact of US tariff policies has not yet fully materialized, creating significant uncertainty on the demand side for stainless steel scrap. Considering the above factors, it is expected that the price of stainless steel scrap will continue to maintain a weak trend in the short term.