Raw Material Prices Continue to Rise, Stainless Steel Profit Margins Under Pressure [SMM Analysis]

This week, the stainless steel market remained weak, with electronic trading continuing to decline and spot prices slightly dipping. The weekly average price of private 304 cold-rolled stainless steel was 13,165 yuan/mt, down 35 yuan/mt WoW. After the Lantern Festival, market trading sentiment remained sluggish, with no significant improvement on the demand side.

Cost side, the prices of major raw materials continued to rise, providing some support to spot prices. The integrated nickel cost for 304 cold-rolled stainless steel was approximately 1,034.14 yuan/mtu, up 1.05% MoM; ferrochrome prices were 7,583.33 yuan/mt, up 116.67 yuan/mt WoW; stainless steel scrap prices were 9,400 yuan/mt, up 100 yuan/mt WoW.

However, cost support failed to offset the pressure from weak market demand, and steel mill profit margins continued to shrink. Based on the integrated daily raw material cash cost, it was approximately 13,735.65 yuan/mt. If settled at the stainless steel mill price of 13,125 yuan/mt, the cash cost incurred a loss of nearly 4.45%, while the full cost incurred a loss of 8.57%.

Looking ahead to next week, stainless steel finished product prices are expected to remain stable or slightly decline. Although cost-side support persists, weak demand is unlikely to reverse in the short term, and the oversupply situation in the market will continue to limit the upside room for prices.

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