November Stainless Steel Scrap Prices Dropped to Yearly Low, Economic Advantage Lost [SMM Analysis]  

As of December 11, the tax-inclusive price of 304 off-cuts in east China was 10,368 yuan/mt, down approximately 594 yuan/mt MoM. By raw material, the cost of producing stainless steel by scrap was about 13,357.89 yuan/mt, while that of producing stainless steel by high-grade NPI was about 13,208.53 yuan/mt. In November, stainless steel scrap prices continued to decline. Due to the drop in raw material prices such as high-grade NPI and high-carbon ferrochrome starting mid-month, the cost support for stainless steel weakened. Meanwhile, year-end sluggish consumption and high social inventory levels pushed stainless steel finished product prices to their lowest point in nearly three years during the month. As a result, stainless steel scrap prices fell in tandem, reaching their lowest level of the year. Market sentiment remained pessimistic, and stainless steel mills, with sufficient raw material inventory, adopted a strategy of limiting and suppressing prices for stainless steel scrap procurement, leading to less active market transactions during the month.

Against the backdrop of an overall decline in raw material prices, the profit outlook for stainless steel producers improved. Stainless steel finished product production in December is expected to remain at a high level, with relatively stable demand for stainless steel scrap. However, due to the recent sharp decline in high-grade NPI prices, the economic advantage of stainless steel scrap has become less apparent. Additionally, stainless steel scrap traders face high costs of holding cargoes and are reluctant to sell at low prices. However, the approaching year-end brings increased pressure for payment collection and sales, and the prices of alternative raw materials such as chrome and nickel showed weak trends. Therefore, while stainless steel scrap prices are already at low levels with limited downside potential, the overall price is expected to remain weak.