[SMM Review] Stainless Steel Prices Outlook Remains Optimistic in Q1

SHANGHAI, Feb 7 (SMM) - The stainless steel futures prices tested 19,000 yuan/mt ahead of the Chinese New Year (CNY) holiday, and then dropped to 17,300 yuan/mt and moved rangebound.

On the supply side, some steel mills will resume the production after February 10, and some will reduce the production due to operating losses of 200-series. Meanwhile, February has only 28 calendar days, which equals to nearly 10% reduction in output from the normal level. As such, stainless steel output is expected to be 2.3 million mt in February.

Stainless steel prices fluctuated violently ahead of the CNY holiday. And the traders had not much stocks in December 2021 when steel prices dropped. Hence the traders now have less stocks available for sale as most of them have already been booked for shipments post the CNY holiday.

In the short term, the market will see concentrated restocking after the holiday, so the stainless steel prices are expected to rise in the first quarter.

On the cost front, the prices of nickel, NPI and stainless steel scrap have been rising, pushing up the costs of stainless steel. In the long run, there will be around 2 million mt of stainless steel capacities commencing production, pressuring the prices. But the capacities will mostly be released in the second quarter or the second half of the year, hence the prices will still maintain its upside potential in the first quarter.