Profit Margin of 300-Series Stainless Steel Products Narrowed to 18,000 Yuan/mt

SHANGHAI, Oct 25 (SMM) - Affected by the decline in the prices of commodities such as coal and ferrous metals, the SS contract showed an overall downward trend. The spot prices of stainless steel were lowered, but the market transaction became weaker.

In the middle of last week, the sharp increase in the nickel prices drove the SS contract to strengthen slightly. The stainless steel spot market was slightly more active. However, the overall spot transaction was weak throughout the week, and the spot prices also promoted the transactions at low prices. Some stainless steel under warrants flowed out last week, and the market supply of cold-rolled products was not too tight. As some of the hot-rolled products had arrived in the market, the supply was sufficient.

At present, under the situation of the weak demand of stainless steel, the price fluctuations in the spot market of stainless steel are closely correlated with the trend of stainless steel SS contracts. However, the electricity rationing and rising costs have supported the prices of stainless steel, and the limited price decline is mainly to facilitate the transactions.

The prices of raw materials continued to increase. The prices of high-grade NPI increased by 57.5 yuan/mtu to 1,502.5 yuan/mtu (ex-factory). Both high-carbon ferrochrome and stainless steel scrap rose slightly. The full cost of stainless steel based on the intraday prices of raw materials was about 19,748 yuan/mt, and the profit margin was about 1,800 yuan/mt. Based on the prices of raw material inventory, stainless steel cost was 18,990 yuan/mt, and the profit based on full cost was about 2,560 yuan/mt. The profit margins are all narrowing, and the prices of stainless steel raw materials will continue to rise. The cost of stainless steel will increase further.

Under the power rationing policy, the reduction of high-grade NPI output was more serious than that of the stainless steel, and the prices rose due to the tight supply. The prices of high-grade NPI increased by 57.5 yuan/mtu, while the prices of stainless steel scrap remained high and were basically stable, so the discounts of high-grade NPI against the stainless steel scrap narrowed by 42 yuan/mtu on the week. The prices of stainless steel scrap are expected to stand at 14,700 yuan/mt (tax included), while the prices of high-grade NPI will continue to rise amid the tight supply, and the cost effectiveness of the high-grade NPI will fall.