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Stainless Steel Prices Drop Sharply amid Weak Demand and High Inventory
Feb 2, 2023 17:11CST
Source:SMM
Due to weak downstream demand and increasing inventory, the most traded stainless steel contract fell sharply today by 3.35% to 16,750 yuan/mt.

SHANGHAI, Feb 2 (SMM) - Due to weak downstream demand and increasing inventory, the most traded stainless steel contract fell sharply today by 3.35% to 16,750 yuan/mt.

On February 2, the average spot price of SMM 1# tin was 17,350 yuan/mt, down 0.57% from the previous trading day. According to SMM research, in the first week after the Chinese New Year holiday, the downstream released demand slowly while stainless steel increased the distribution of goods. As such, the inventory in the spot market accumulated significantly. In addition, the inventory of warehouses that can directly ship the goods to agents and traders increased significantly. Meanwhile, the inventory of warrants also increased to a high level. The spot prices were stable and declined slightly under the increasing inventory.

In terms of inventory, in the first half of February, social inventory may accumulate slightly. According to SMM research, although the market is optimistic about the stainless steel market in early 2023, it will still take some time for the release of terminal demand.

As January 31, the total social inventory of stainless steel was about 779,500 mt, up 14.87% on the month and 14.01% on the 15-day basis. The inventory of 200 series stainless steel increased 2.81% on the month and 1.81% on the 15-day basis; the 300 series rose 22.87% and 20.94%; the 400 series increased 2.97% and 5.92%.

In terms of cost, the prices of NPI remained flat within the day. Stainless steel mills successively made inquiries after the CNY holiday, but were still wait-and-see amid the high costs. It is expected that the prices of NPI will remain stable in the short term.

However, the market was bullish about the market. Coupled with the low inventory of chrome ore, low arrivals and strong expectations for increasing demand, the prices of chrome ore continued to rise. As such, the costs of ferrochrome increased further and the prices of ferrochrome will be relatively strong in the near future.

On the whole, the cost support of stainless steel was strong and it will still take some time for terminal demand to recover. As such, the social inventory and the inventory of steel mill accumulated to a high level. SMM expects that in the short term, the spot prices of stainless steel be stable and weak under pressure while the futures prices will decline. SMM will pay attention to the US non-farm data released tomorrow.
 

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