Stainless Steel Futures Fluctuate, Spot Transactions Mediocre; 304 Cold-Rolled Cost and Profit Under Pressure [SMM Analysis]

This week, the price of the stainless steel 2505 futures contract showed a fluctuating trend. Data on the cost, price, and profit margin of 304 stainless steel cold-rolled coils indicated a continuous decline in both cost and price, compressing profit margins. The market's supply-demand imbalance was prominent, with weak demand and relatively sufficient supply. In the short term, the stainless steel market may maintain the current pattern, posing challenges to corporate profitability.

From the raw material perspective, price fluctuations of key raw materials such as high-grade NPI, imported nickel plates, and stainless steel scrap significantly impacted stainless steel production costs. Among them, the transaction price of high-grade NPI rose on February 28: a nickel iron plant in Indonesia recorded a transaction price of 995 yuan/nickel (tax-included, ex-warehouse), with a transaction volume of tens of thousands of mt and delivery scheduled for late March. The profit margin for 304 cold-rolled stainless steel remained at a low level, even negative, with cold-rolled coil producers facing significant cost pressure and profit compression.

The cost decline may be attributed to factors such as lower raw material prices, improvements in production processes, or economies of scale. Meanwhile, the price drop was mainly due to relatively sufficient market supply and persistently weak demand. Downstream industries, such as construction and home appliances, showed low purchase willingness, intensifying market competition and making it difficult for prices to rise.

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