How will the Supply Pattern Change amid the Intensive Production Reduction Plans of Stainless Steel in July

SHANGHAI, June 29 (SMM) - According to SMM research, due to the high cost of stainless steel and the high in-plant inventories of steel mills, many steel mills suffered great losses, hence they intensively planned to reduce the production.

How is the market outlook?

In terms of supply, the overall inventories were high from January to May, while the overall supply in June decreased and the reduction in production increased compared with May. In this case, the overall inventories fell. Therefore, steel mills chose to reduce the production and digest the in-plant inventories in June as the consumption was weak and the inventories were high amid the pandemic. In terms of consumption, consumption of stainless steel began to resume in June amid the start and completion of some large-scale projects. Although steel mills chose to digest the inventories, the supply was still in surplus, hence steel mills intensively planned to reduce the production in July.

On the demand side, according to feedback from steel mills and downstream processing plants, there is currently no obvious sign of consumption resumption being delayed to July and August as the July and August is during traditional off-season. Therefore, the overall supply and demand pattern may gradually be balanced in June, July and August. SMM expected that the stainless steel prices will decline slightly as the profit margins may recover amid the cost support.