The Profits of Steel Mills Recovered amid the Low Costs

SHANGHAI, Aug 1 (SMM) - At present, the cost support of stainless steel weakened. Although the stainless steel prices fell amid the weak cost support, stainless steel prices fell slightly more slowly than raw material prices, hence the steel profits continued to recover last week. Overseas stainless steel output decreased, but there were more NPI flowing back to China. Therefore, the domestic NPI was in large surplus. In addition, due to the weak overseas demand, ferronickel prices continued to fall and were in discounts over NPI prices, which put great pressure on NPI prices. However, the production of the 300-series stainless steel is expected to pick up in August as the profits repair. In this case, steel mills will be more willing to purchase NPI. The prices of ferrochrome fell sharply because steel mills forced down the prices of raw materials. In addition, some steel mills further reduced the production, hence the prices of ferrochrome may continue to fall. Although the consumption of stainless steel was still relatively poor amid the cautious sentiment of downstream players, the spot consumption picked up compared to the previous weeks. In this case, SMM expects that the profits of steel mills will continue to expand this week.