Stainless Steel Mills Stopped the Delivery due to Halted Logistics Services Despite the Rising Futures Prices

SHANGHAI, Jan 17 (SMM) - Recently, stainless steel futures prices rose boosted by the low US dollar index. Yesterday, the most-traded SHFE stainless steel contract rose 0.56%.

The average spot price of 304/2B coil-raw (Wuxi) stood at 17,200 yuan/mt, flat from the previous trading day. According to SMM research, the spot prices in Wuxi and Foshan markets remained stable.

In terms of fundamentals, the stainless steel mills rarely released the goods last week, and the supply release may still be scare this week. Most enterprises took holidays and downstream restocking demand was sluggish before the CNY holiday.

In terms of inventory, due to the halted logistics services, steel mills suspended the delivery of goods. Coupled with the CNY holiday, the social inventory increaed only slightly.

Recently, SMM stainless steel inventory in different regions changed little. As of January 15, the inventory in Wuxi and Foshan increased 5,000 mt compared with December 31. Among which, 200 series stainless steel inventory increased 1,000 mt, 300 series increased 7,000 mt, and 400 series decreased 3,000 mt.

In terms of costs, the prices of NPI remained stable as the current spot supply was tight. The production reduction of NPI plants in January is adjusted according to the production schedule of stainless steel mills. Since the stainless steel mills have basically completed their restocking target in 2022, the demand will be released after the CNY holiday. As such, the short-term prices are expected to remain stable.

The price of ferrochrome remained flat as some traders stopped marking transactions amid the approaching Chinese New Year. The ferrochrome prices were strong supported by the firm chrome ore prices as the ore supply was tight. Although the pre-holiday transactions were muted, the market was generally optimistic about the pot-holiday market. It is expected that the prices of ferrochrome may increase after the CNY holiday.

On the whole, the transactions in the stainless steel market were muted and the spot price remained stable before the Chinese New Year. SMM predicts that the spot prices and futures prices of stainless steel may increase after the holiday with the recovery of downstream demand.