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[SMM Analysis] the opportunity for stainless steel futures to rise to a high in the past two months or to be alert to downside risks?
Apr 20,2020 18:17CST
The content below was translated by Tencent automatically for reference.

SMM4 20: April 20, stainless steel futures high open high, as of the end of the day, the main contract SS2006 closed at 13320 yuan / ton, an increase of nearly 3.8%, since the beginning of April, stainless steel futures prices continued to rise, as of today has recovered all the lost land since February 21.

Spot, according to the latest SMM research (April 20), Wuxi spot market quotation has varying degrees of upward adjustment, some traders said that now the market 304 stainless steel specifications are still in a state of shortage, supply circulation is not very sufficient, follow-up prices or still strong operation, but the specific increase depends on the downstream specific pick-up situation. Foshan 200 series and 300 series cold rolling series once again slightly increased by 50 yuan / ton, last week the terminal more active, the market to the warehouse is obvious, but some operators said this week the actual transaction situation may slow down, the short-term steel prices are expected to run smoothly as a whole.

Since April, stainless steel inventories have continued to decline as traders replenish warehouses and downstream procurement demand. According to SMM data, total stainless steel inventories fell 150400 tons, or 13.4 percent, in mid-April from the end of March to 972700 tons. After the rise in stainless steel prices, under the full cost caliber, the national average profit based on inventory raw materials has shrunk from 1200 yuan / ton last week to 620 yuan / ton; under the standard of cash cost, the cost profit has changed from loss to profitability, as of Friday, the national average cost is about 130 yuan / ton.

On the demand side, the recent supply of traders and downstream procurement demand gradually released, stainless steel inventory showed a downward trend, forming a certain support for stainless steel prices. However, after the completion of the replenishment, the subsequent demand or gradually weakens the trend of transaction weakening, forming pressure on the price rise. On the supply side, recently, stainless steel mills seal and limited orders, resulting in a certain impact on supply, the market spot resources are tight. On the other hand, at the cost end of raw materials, the prices of stainless steel waste and nickel pig iron are stronger, and the prices of stainless steel in the later stage may be fluctuating due to the increase of cost. The limited increment of demand leads to the lack of upward strength, but the decline of inventory is supported by the cost.

The stainless steel SS2006 contract rose sharply after the start of trading today, breaking through 13300 yuan / ton at noon break, reaching a maximum of 13390 yuan / ton, and the overall center of gravity fluctuated around 13300 yuan / ton in the afternoon. The rate of increase for the whole day was nearly 3%, gradually recovering the decline due to the impact of the epidemic after the resumption of work during the Spring Festival. Today's rise in stainless steel contracts is mainly due to the pull of long funds, positions increased by more than 2300 hands to 48000 hands, trading volume also reached 38000 hands high. Shanghai nickel and stainless steel contracts have both risen sharply today, especially the upward trend in stainless steel contracts in the past two weeks, which has partly contributed to the sentiment of arbitrage in the market. However, while the disk price continues to rise, we need to pay careful attention to the suppression of the price by the behavior of profit unwinding.

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