SS Contract Prices Fluctuate Wildly Last Week amid the Spread of COVID-19 Outbreaks

SHANGHAI, Dec 26 (SMM) - Last week, the SS contract prices once slumped to around 16,300 yuan/mt. On the supply side, the arrival pace of goods at the market was slow, and downstream companies did not pick up Delong stainless steel in the south China market. Goods are expected to arrive at the market this week. On the demand side, goods sold last week were mostly warrant resources. Due to the limited specifications of warrants, most of the orders were placed by traders who need to restock in a small amount. In addition, the wild COVID-19 outbreaks in various regions cast a great impact on the entire industry chain and seriously hindered the production of various companies. And the terminal demand was sluggish. Therefore, the processing plants maintained low operating rates and were less willing to restock raw materials. Stainless steel demand cannot be smoothly transmitted to the downstream sectors. In general, the unexpected weakening of demand has led to further accumulation of social inventories of stainless steel, gradually weighing on the market's inventory pressure at the year-end. The spot prices will be stable with some declines. In terms of cost, high-grade NPI prices stayed stable with some declines as a large steel mill greatly reduced its production. Meanwhile, the mills did not accept high NPI prices. SMM presumes that the short-term NPI prices will move rangebound with some declines since the market still get some spot NPI sources. Prices of ferrochrome rose slightly as the wait-and-see sentiment filled the market near the steel mills’ bids at the end of the month. Ferrochrome plants still got firm cost support from chrome ore and coke, and they carried insufficient in-plant inventories of finished products, thus the companies were less willing to lower their quotes. Short-term ferrochrome prices will be stable. To sum up, the fundamentals remained slack. The impact of the COVID-19 outbreaks on transactions may surpass market expectations, while the downward space for stainless steel prices will be limited by the firm costs. Spot stainless steel prices will be stable with some declines in the short term, and the SS contract will stabilise.