SHANGHAI, Jul 18 (SMM) – At the 7th 2022 China International New Energy Conference - China International Nickel-Manganese Industry Chain Development Forum jointly held by SMM and the SHFE, SMM’s nickel & stainless steel analyst He Siyao made a review of the stainless steel market in 2022 and an in-depth analysis of the stainless steel market supply and demand structure, costs, raw materials, supply-demand balance, and market outlook.

Review of stainless steel price trend 

The price of stainless steel began to rise from July 2021. As an industry that has developed into a relatively mature stage, release of new capacity and elimination of old capacity took place simultaneously. Along with rising raw material price and bullish sentiment, stainless steel price kept going up.  However, stainless steel price pulled back this year due to the impact of the pandemic.

In August and September 2021, electricity prices rose due to implementation of the energy consumption dual-control policy, forcing many stainless steel mills to significantly reduce production. Supply was in shortfall due to rising demand and output cuts, sending stainless steel price to a high of nearly 22,000 yuan/mt. In 2021, the rise of stainless steel price was also accompanied by a sharp increase in costs.

In March 2022, soaring LME nickel price and the geopolitical conflict between Russia and Ukraine also sent stainless steel price higher. In April 2022, after the pandemic broke out again across the country, stainless steel price fell back.

The current price of stainless steel is basically maintained around 18,000 yuan/mt on the back of higher costs. Nickel is one of the most important raw materials in stainless steel production. 

Raw material: stainless steel scrap 

Under the concept of carbon neutrality, imports of stainless steel scrap gradually recovered after September 2021, and the proportion of stainless steel scrap in domestic stainless steel production rose. At present, stainless steel scrap is more widely used in the production of #304 stainless steel than in other stainless steel.

Stainless steel scrap is now the second most important nickel raw material in stainless steel production, and the second most economical nickel raw material.

Stainless Steel Imports - Analysis of Imports from Indonesia

About 80% of China's imported stainless steel comes from Indonesia. With the rapid increase in newly commissioned capacity of stainless steel in Indonesia, import from the country continues to increase. It should be noted that Indonesia's newly added output is relatively large, which could pressure the Chinese stainless steel market whether it is exported to China or exported to Europe and the US.

Stainless Steel End Consumption - Main Downstream Sectors

The proportion of stainless steel consumption in downstream sectors has not changed much in the past five years. Real estate and infrastructure industries are the major consumers of stainless steel, but the actual consumption fell short of expectations.  

Forecast for 2022-2026

Stainless steel supply will remain in a small surplus, and NPI market will also be in oversupply.