SMM, July 30: the rise of "demon nickel" in early July led to the upward price of 300 series stainless steel. From July 3 to July 19, Shanghai nickel climbed from 97170 yuan / ton to 118430 yuan / ton, an increase of 21.9%, followed by 304stainless steel (Wuxi market, hot rolled coil) gradually groped from 13700 yuan / ton to 14500 yuan / ton in the same period, an increase of 5.8%, which is not satisfactory compared with the increase of nickel price. On July 19, the price of hot rolled narrow strip August futures in Qingshan reached 14800 yuan per ton, up 1300 yuan from July 10. At this stage, the price increase of stainless steel basically follows the passive rise of nickel price, and the large manufacturers take the lead to push up the price.

Figure 1: VS profit on cold rolling price of 304stainless steel in recent three years

Data source: SMM

In late July, after the rational pullback from the high level, the nickel price gradually entered the high shock stage, which can basically revolve around the 110000 yuan mark, which is 13% higher than the price in early July.

However, in the case of no obvious improvement in downstream consumption, stainless steel after passively following the rise in nickel prices, the shipping pressure is obviously self-evident, how to ship goods smoothly at the level of loose supply is still a problem that steel mills and agents need to face.

Figure 2: stainless steel social inventory data from January 2018 to present

Data source: SMM

Last Thursday and Monday, Castle Peak cut the hot strip August futures price by 500 yuan and 400 yuan respectively, taking traders off guard after rising and then falling.

Table: Castle Peak Hot rolled narrow Strip Futures Price in late July 2019

Brand

Opening time

Futures time

Hot rolled narrow strip below 750mm

Castle Peak

10 July

August

13500

Castle Peak

19 Jul

August

14800

Castle Peak

25 July

August

14300

Castle Peak

29 July

August

13900

Data source: SMM

SMM believes that the pricing logic of stainless steel is mainly determined by its own supply and demand side, but when the nickel price fluctuates greatly, the price will be disturbed by the shipping strategy of large factories and large agents. in the case of basically no major changes in the supply side, the shipping strategy of mainstream manufacturers will become the weather vane of the market, and the current shipping pressure can also be inferred from its shipping strategy. At present, steel mills are still trying to lower prices to promote shipment, although the price performance is weak, at least a signal of positive adjustment, and according to the 304 stainless steel cost model, the latest hot rolling futures price compared with the highest cost still has a small profit, from the point of view of raw materials such as nickel and chromium, or the industry is more happy to see.

By July 30, the latest hot rolling price for SMM 304/NO.1 Wuxi market was 14200 yuan / ton, unchanged from the previous day.

The charts and data involved in the above contents can be read in the SMM stainless Steel Weekly report.

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