Nickel and Chromium Prices Fell, Cost Support for Stainless Steel Loosened [SMM Analysis]

This week, the cost of 304 stainless steel continued to decline, with nickel and chromium prices also weakening, further loosening the cost support for stainless steel prices.

In terms of nickel-related costs, the price of high-grade NPI continued to fall, with the low point this week reaching 980 yuan/mtu. However, due to thin profits for high-grade NPI smelters and the implementation of new resource tax regulations in Indonesia, the room for further price declines was limited. Data shows that the price of 10-12% high-grade NPI dropped by 10.5 yuan/mtu this week, closing at 986 yuan/mtu. Notably, driven by its economic advantages, the supply of stainless steel scrap became slightly tight, and its price strengthened in tandem with the rise in stainless steel finished product prices. Specifically, the price of 304 off-cuts in east China rose by 250 yuan/mt this week, reaching approximately 9,850 yuan/mt.

In terms of chromium-related costs, the retail price of high-carbon ferrochrome experienced a slight pullback. Although the futures price of South African 40-42% chrome concentrate ore rose above $300/mt during the week, the previous significant increase in ferrochrome prices had already restored profits for ferrochrome producers. Additionally, against the backdrop of low stainless steel prices, market expectations for next month's high-chromium steel tenders were pessimistic, prompting the retail price of high-carbon ferrochrome to stop rising and pull back. Specifically, the price of high-carbon ferrochrome in Inner Mongolia fell by 100 yuan/50 base mt this week, dropping to around 8,350 yuan/50 base mt.

Currently, as stainless steel costs further declined and prices slightly rebounded, the losses of stainless steel mills narrowed. Taking 304 cold-rolled steel as an example, based on the raw material costs of the day, the cash cost decreased by 42 yuan/mt during the week, reducing the loss margin to 6.87%. Based on raw material inventory costs, the cash cost decreased by 43 yuan/mt, with a loss of 4.39%. Looking ahead to next week, stainless steel costs are expected to continue to decline. Meanwhile, as stainless steel finished product prices stop falling and rebound, the previous situation of inverted costs and prices for stainless steel mills may be alleviated to some extent.