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Stainless Steel Operating Rate May Reach a Rare Low around 84% in Sep Due to Policy Restrictions
Sep 7,2021 17:55CST
Source:SMM
According to SMM survey, the domestic stainless steel output in August totalled about 2.82 million mt, down 103,000 mt or 3.53% month on month but up 2.19% year on year. China’s output of stainless steel totalled 22.53 million mt in January-August, an increase of 22.65% year on year.

SHANGHAI, Sep 7 (SMM) – According to SMM survey, the domestic stainless steel output in August totalled about 2.82 million mt, down 103,000 mt or 3.53% month on month but up 2.19% year on year. China’s output of stainless steel totalled 22.53 million mt in January-August, an increase of 22.65% year on year.

The electricity curtailment policy in Guangxi led to a decline in the total local output of stainless steel in August. The output in other regions stood stable.

The production restrictions will be strengthened in September, and Guangxi requires that the local output in September should not exceed the 70% of the average monthly output in the first half of 2021. Therefore, the stainless steel output is expected to decline 250,000 or 9% on the month in September, a decrease of 7.6% on the year.

200 series production will fall 89,000 mt to 744,000 mt, 300 series production will decline about 112,000 mt to 1.36 million mt, and 400 series production will drop about 52,000 mt to 457,000 mt. The total output of stainless steel is expected to stand low as the production restrictions will extend to November.

The overall operating rate of stainless steel plants is estimated to be 84% in September, close to that during the CNY holiday, and at a lower than the same period in previous years.

According to SMM survey, the total output of stainless steel in 2020 was about 29.87 million mt, and the total output from January to August 2021 is about was about 22.55 million mt. The total stainless steel output is required by relevant policy to be lower than 2020, so the total output from September to December should not exceed 7.35 million mt. In this context, the monthly output from September to December will average around 1.84 million mt, and the overall operating rate will drop to 60%.

Inner Mongolia and Sichuan will maintain the low production, while the operating rate will increase in Shandong, where new capacities have been put into production last year. Other regions will maintain the operating rates around 70%.

However, the restrictions and production conditions varied by region, and some steel mills have both capacities of normal carbon steel and stainless steel. The plants can switch the production depending on the profits and orders.

The profits of 200 series stainless steel current stand around the break-even point, while the profits of 300 series products are over 1,000 yuan/mt based on full costs. Therefore, stainless steels will try to maintain the 300 series production amid the production cuts.

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