[SMM monthly Outlook] stainless steel futures prices hit new highs in July and continue to hold up in August?

SMM8 March 3: since July, the futures price of stainless steel has continued to rise. as of July 30, the main contract price of stainless steel was 19995 yuan / ton, up 3165 yuan / ton from 16830 yuan / ton at the end of June, or 18.8% a month. After entering August, the stainless steel market suddenly encountered a "cold spell", and the futures price fell sharply for two consecutive days.

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On the spot side, the spot price of stainless steel frequently reached a new high in July. Take SMM 304 Universe 2B Volume-rough Edge (Wuxi) as an example, the average price on July 30th was 20550 yuan / ton, up 17.77% from 17450 yuan / ton at the end of June, setting a new all-time high.

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In July, from the perspective of stainless steel raw materials, the shortage of Ferro-nickel and ferrochromium led to a rise in cost. in addition, the spot market resources of stainless steel were tight, the spot market replenishment was limited in the short term, the inventory in the downstream society was low, and the shortage continued. Coupled with the continuous rise of nickel futures, the spot and futures prices of stainless steel frequently reached new highs in July and continued to rise.

In August, stainless steel began to fall back after refreshing an all-time high on August 2. On the spot side, as of the latest research, affected by the downward mood of futures, some merchants in 304 cold-rolled spot goods today slightly reduced their prices, but the spot prices in the morning market are still mainly stable. Market merchants said that at present, the spot resources in the market are relatively tight, the daily arrival volume is limited, the supply of Delong goods arrives dozens of tons every day, and a certain number of previous orders have not been delivered, the spot still maintains a tight trend, and there is no pressure on inventory. the current decline in spot prices is not obvious.

In addition, recently, the epidemic has spread again in many areas. affected by the epidemic prevention and control measures, 22 expressway toll stations in Nanjing, Taizhou, Yangzhou, Nantong, and Suzhou have closed their exits or entrances, and in terms of stainless steel, according to research and understanding, Wuxi stainless steel market trade has been limited, mainly in terms of transport and delivery, but it can be checked by accounting, the procedures have been slightly increased, and the time has been slightly delayed. But at present, the overall impact is small.

Summary

In July, power cuts were carried out in Inner Mongolia, Hunan, Guangxi and other regions, and the output of high-carbon ferrochromium was obviously restricted. The output of ferrochromium in Inner Mongolia decreased by about 50%, resulting in a tight supply of stainless steel raw materials and high prices; superimposed policy news that the output of the iron and steel industry did not exceed last year collectively pushed stainless steel up sharply, rising by 20,000 yuan per ton.

In early August, stainless steel showed a high decline, early profit capital flight and the spread of the epidemic in recent days, market sentiment disturbance, comprehensive factors under the influence of stainless steel prices downward, but the overall downward space is expected to be limited, stainless steel prices are still strong in August, high shock is expected to be the main. On the one hand, the production limit of stainless steel is gradually implemented, and the output supply decreases; on the other hand, the raw material end of stainless steel is affected by power restriction, and the price is high, which forms a support for the cost of stainless steel; in addition, the spot market of stainless steel is still a tight trend of supply, and the inventory is in a state of continuous reduction. By the end of July, the total inventory of 300 series has dropped to less than 400000 tons, which is at the low level since 2020, so it is expected that stainless steel is still high shock.