SHANGHAI, Nov 15 (SMM) – A series of events in the stainless steel market has led to violent price volatilities last week. The overall prices trended lower. At the beginning of the week, the news of the production resumption at Guangdong Guangqing Metal Technology pressured the stainless steel market. The SS2201 contract dropped to a low of 17,000 yuan/mt, but rebounded briefly after production was halted again at the company. The prices then weakened quickly.
As the mills have resumed production from power rationing, the stainless steel output increased. But after the market entered the traditional off-season, the transaction declined. And the drop in the prices of raw materials has lowered the costs of stainless steel, weakening the support to prices.
The market is pessimistic over the stainless steel prices. The current SS2201 contract prices stood at around 17,000 yuan/mt, and the current price difference between futures and spot cargoes exceeds 2,000 yuan/mt. According to the latest calculated stainless steel costs, the cash cost of $304 cold-rolled products is about 18,500 yuan/mt, and the SS2201 contract price has also been lower than the cost.
Although the market is generally pessimistic, short-selling operations shall be carried out cautiously.