#304 Stainless Steel Production Suffered Losses, Stainless Steel Scrap Turned More Cost Effective than High-grade NPI

SHANGHAI, Dec 6 (SMM) - The average price of stainless steel fell by 1,000 yuan/mt last week. The price decline of finished products was more significant than the decrease in costs, so the steel mills suffered losses based on the prices of raw material inventories as well as the intraday raw material prices.

The full cost based on the intraday prices of raw materials in steel mills with NPI facilities was about 17,700 yuan/mt. The steel mills suffered losses of about 300 yuan/mt based on the average SMM price of 304 cold-rolled coil (burr edge). The cost based on the prices of raw material inventories was about 18,400 yuan/mt, and the losses stood at 700 yuan/mt. The stainless steel prices stood near the break-even point. The price decline of raw materials may narrow the losses, but the steel mills may hardly have higher profits amid the bearish market sentiments.

The prices of stainless steel scrap fell along with the stainless steel prices, while the prices of high-grade NPI stood stable amid scarce transactions. The average premium of high-grade NPI stood at 42 yuan/mtu over stainless steel scrap. The cash cost of cold-rolled stainless steel produced completely with stainless steel scrap was about 17,150 yuan/mt, while the cost with high-grade NPI stood at 18,000 yuan/mt. However, a large steel mill in south China released its purchasing prices, and the high-grade NPI prices are expected to fall, which will have higher cost effectiveness.