These are stainless steel production costs by raw materials in February: stainless steel scrap (14,193.84 yuan/mt) and highgrade NPI (13,731.33 yuan/mt). Raw materials dipped amid falling prices of stainless steel finished products. Inquiry price of stainless steel scrap was flat, but 304 and 201 off-cuts scrap prices dropped several times. With waning impact of RKAB, high-grade NPI prices were dominated by fundamentals, but may decline to a limited extent due to lingering losses of domestic NPI plants. 304 off-cuts scrap prices in East China fell to 10,200-10,300 yuan/mt. In March, surging scheduled productions of 200 and 300 series stainless steel and tight supply may offer some buoyancy to stainless steel scrap. In high-grade NPI market, there was price slip and some available stocks in China. Cost advantage of Indonesian NPI lingered. It is expected that the economic advantage of high-grade NPI will expand in March.

The average discount of high-grade NPI was 351 yuan/mtu against refined nickel in February, up 4.75 yuan/mtu MoM, mainly because the latter hiked more than the former. The incident of RKAB approval and some financial attributes significantly boosted refined nickel prices. Prolonged market bearishness fuelled buyers’ reluctance towards current NPI in February. In addition, NPI production diminished, but still exceeded demand. In March, capacity expansion and inventory backlogs will make refined nickel prices inching down during the rainy season. Possible easing of raw material supply shortages amid acceleration of the RKAB approval may add NPI output in March. The price difference between NPI and refined nickel may narrow in March.

What needs attention in March is that high-grade NPI prices will retrace down, with RKAB fallout ebbing. Finished stainless steel price erosions and demand sluggishness may drag down 300 series stainless steel scrap and high-grade NPI prices. A spike in stainless steel production in a peak season will add more raw material demand. Domestic traders and NPI plants will still sufferlosses, limiting downside in prices high after low-price supply fully consumed. Buyers may aim to source high-grade NPI whose economic advantage may remain in March.

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