The cost efficiency of stainless steel scrap continued to decline

Currently, the price of high-grade NPI is at 1,105 yuan/mtu, while the price of stainless steel scrap is 1,026.58 yuan/mtu. Stainless steel spot prices stopped falling and stabilized last week, but trading remained slow. In terms of supply, the stainless steel processing factories in Wuxi and Foshan maintained their production rates, keeping stainless steel scrap supply stable. Regarding demand, as of October 22, the throughput of stainless steel scrap in the East China Nonferrous Metal City was around 12,500 mt, with demand for stainless steel scrap recovering to mid-September levels. High-grade NPI continued to weaken, with prices dropping by 10 yuan/mtu. Some overseas Indonesian high-grade nickel matte production lines have shifted to producing high-grade NPI, possibly causing inflow of high-grade NPI into China. However, downstream demand for stainless steel remains notably weak. With a surplus in supply combined with weak demand, the high-grade NPI prices are expected to continue on a weak trajectory. In terms of raw materials, the cash cost of stainless steel produced with stainless steel scrap was around 14,838.16 yuan/mt, and that produced with high-grade NPI was around 14,979.41 yuan/mt. In summary, SMM believes that in the short term, underperforming high-grade NPI prices will weaken the cost-efficiency of stainless steel scrap.