Daily Updates on SHFE Base Metals and Stainless Steel Warrants, With Nickel Critically Low

[SMM Analysis] Prices Recover While Raw Materials Remain Weak, Stainless Steel Mill Profits Rebound Marginally This week, the stainless steel futures and spot markets showed a divergent pattern, with finished products recovering slightly while raw materials weakened overall. Steel mills achieved marginal profit recovery by pushing for lower raw material prices. Based on 304 cold-rolled calculations, steel mill profit structures diverged: profit margins calculated with current raw material prices recovered to 1.24%, turning positive, but margins calculated with inventory raw materials remained at -1.98% due to previously high-priced raw materials. This week, the decline in nickel-based raw materials slowed and gradually stopped falling and stabilized. Earlier, nickel pig iron prices continued to fall to low levels, and combined with weather-related water shortages in Indonesia disrupting production, expectations for supply contraction rose, providing bottom support for prices. Low valuations coupled with supply positives drove increased restocking demand from steel mills, significantly weakening upstream willingness to cut prices, and the downward pace of nickel pig iron essentially stalled. As of this Friday, the delivered tax-inclusive price of domestic 10-12% grade Indonesian high-grade NPI fell only slightly by 3 yuan/nickel unit to 1,048 yuan/nickel unit, with nickel-based costs gradually stabilizing. This week, stainless steel scrap remained weak but stable, lacking momentum for a rebound. Low-level recovery in SS futures and sporadic pre-holiday restocking demand only provided slight support for finished products, but end-use demand did not recover substantively and transactions remained sluggish, making it difficult to drive scrap prices higher. Meanwhile, the pullback in high-grade NPI compressed the substitution advantage of scrap, and with the failed expectations for a September peak season and rising expectations for production cuts at steel mills in October, steel mills remained cautious in procurement and continued to push for lower prices. Under multiple bearish constraints, scrap struggled to stage a trend rebound and continued to move sideways in a weak range. As of this Friday, the tax-exclusive price of mainstream 304 off-cuts in Shanghai remained flat at 9,700-9...

[SMM Stainless Steel Scrap Weekly Review] SS Futures Recovery Fails to Offset Steel Mill Production Cut Expectations; Narrowing Cost Advantage Keeps Stainless Steel Scrap Prices Stable This week, 304 stainless steel scrap off-cuts prices in east China remained flat, with a quotation range of 9,700-9,800 yuan/mt. In Foshan, 304 stainless steel scrap off-cuts prices also held steady, ranging from 9,800 to 10,100 yuan/mt. From a raw material cost perspective, the production cost of stainless steel using only stainless steel scrap as feedstock stood at approximately 13,763.18 yuan/mt, while the cost using only high-grade NPI reached 14,186.61 yuan/mt. Stainless steel scrap still holds a certain cost substitution advantage over high-grade NPI, but the price spread between the two has narrowed. This week, stainless steel scrap prices remained in the doldrums overall. During the week, SS futures rebounded from lows, and with the holiday approaching, end-user buyers' bargaining power weakened somewhat. Spot prices of finished products edged up, and the decline in stainless steel scrap prices eased, keeping them stable. However, the positive impact from the futures recovery lacked sustainability, as end-user demand did not actually recover. Overall market transaction volumes saw limited improvement, and downstream players held strong pessimistic wait-and-see sentiment toward the near-term outlook, making it difficult to provide any substantial boost to scrap prices. Meanwhile, high-grade NPI prices continued to pull back, further squeezing the cost substitution advantage of stainless steel scrap and weakening the bottom support for scrap. The market as a whole showed a stable but slightly weak trend. Overall, the modest futures recovery and pre-holiday restocking demand were insufficient to offset multiple bearish factors, including weak end-user demand and soft supply expectations. Hopes for a peak-season recovery have now completely faded, and end-user restocking demand remains...

[SMM Analysis] Macro Headwinds Materialize, Futures Recover, Pre-Holiday Just-in-Time Demand Releases Stainless Steel Inventory Destocking SMM, September 24: This week, stainless steel social inventory continued its destocking trend, with the inventory midpoint moving steadily lower and pressure from accumulated market supply easing further. Total inventory in the two core markets of Wuxi and Foshan pulled back significantly, and the pace of destocking widened this week. This week, recovering macro sentiment combined with pre-holiday just-in-time demand release to drive continued stainless steel inventory destocking. With the US Fed's rate hike now landed, the macro headwinds that had weighed on the market were largely priced in, significantly easing bearish market sentiment. SS futures strengthened in a recovery move, lifting spot prices in tandem and visibly reviving market trading activity. Ahead of the Mid-Autumn Festival holiday, downstream end-users concentrated their release of phased just-in-time procurement demand to ensure normal production before the break, boosting inquiry and transaction activity and improving the efficiency of inventory digestion. Under the combined tailwinds of recovering futures sentiment, warming spot prices, and concentrated pre-holiday just-in-time restocking, market supply was effectively absorbed, driving social inventory steadily lower. Overall, the materialization of macro headwinds restoring market confidence, stronger futures lifting spot prices, and concentrated pre-holiday just-in-time demand release from end-users were the core drivers behind this week's sustained and substantial stainless steel inventory destocking. At the current stage, market pessimism is gradually fading, the low-level recovery in futures continues, and with pre-holiday just-in-time demand providing support, the pace of inventory destocking keeps strengthening. In the short term, as macro headwinds are fully priced in and market sentiment steadily recovers, inventory buildup pressure continues to ease. Supported by the orderly release of end-user just-in-time demand, inventory is likely to extend its mild destocking trend...