SHANGHAI, Jan. 11 (SMM) -- SMM conducted a survey of monthly output at 20 domestic private stainless steel mills, with 6 mills in Zhejiang province, 11 mills in Jangsu province, 2 mills in Shandong, and 1 mill in Shanghai. The capacity of these 20 mills is 268.2 kt/yr, accounting for 3.4% of China's total private stainless steel capacity of 7.9 million mt/yr.
The survey shows actual stainless steel output at 20 mills was 13.6 kt during November 2009, with an average operating rate at 61.03%; actual stainless steel output was 14 kt during December 2009, with an average operating rate at 62.82%. Average operating rate at small private stainless steel mills climbed steadily from October to December 2009.
Limited mills reported slight growth in output in November and December due mainly to increasing orders. Recently, nickel prices increased significantly, and stainless steel prices advanced as well. Last week, Taigang Stainless Steel Company raised settlement prices for #304 cold-rolled and hot-rolled stainless steel by RMB 1,400/mt, while Zhangjiagang Pohang Stainless Steel Company also raising benchmark prices by RMB 1,400/mt. Lianzhong Stainless Steel Corporation raised benchmark prices for #304 cold-rolled and hot-rolled stainless steel by RMB 1,000/mt, and raised prices for #201 cold-rolled and hot-rolled stainless steel by RMB 300/mt. Although trading sentiment was neutral, and most market players stayed out of the market, a limited number of downstream producers with ample cash flow increased purchase volumes for stock replenishment, as the Chinese New Year holiday is approaching. For those mills, orders were higher.
Another portion of mills said their output remained stable in November and December. They said their previous inventories were able to meet the needs from slightly increasing orders. In the mean time, stainless steel prices failed to stabilize, and the sluggish demand resulted in uncertain market outlook, so mills will face stronger pressure if they increase output blindly. Although stainless steel prices rose slightly, the weak demand and constant increases in raw material prices helped squeeze the profit margins at steel mills heavily.
Steel mills will shut down for holidays as the Chinese New Year holiday nears, exerting negative impact on operating rates at these mills in January and February. SMM will pay close attention to whether or not stainless steel market will become weak after downstream consumers complete the stock replenishment.
Copyright © SMM. All Rights Reserved
None of this material may be used for any commercial or public use in any forms or means, without the prior written consent of SMM. For reproduction issue, please contact us by email: email@example.com